20 March 2019

According to Dr, Sherry Cooper, chief economist for DLC, it’s quite a brave decision, although she says it’s important to wait for the details of how the loan will be repaid.

In addition to it, she said that along with an increase of the tax-free withdrawal from RRSPs from $25,000 to $35,000, all the measures focus on the demand and not on the poor supply of affordable housing options.

Meanwhile, the Canadian Home Builders’ Association (CHBA) believes the budget measures will still support the supply.

“The new First-Time Home Buyer Incentive, which implements shared equity mortgages for qualified first-time buyers, will really change the market situation only if the government estimates are right, meaning if we see 100,000 more Canadians become homeowners during the next three years. This influence will be the same as the impact of CHBA’s proposed returning of 30-year insured mortgages for first-time home buyers,” – noted CHBA CEO Kevin Lee. “This incentive can’t be too soon, as the markets are already facing strong difficulties, so we hope the measure will be taken as soon as possible”.

Nevertheless, Lee still called for reconsidering the mortgage stress test.

“Today’s restrictions on mortgage access mean that many millennials and new Canadians can’t become homeowners, and the economic consequences are significant.”

However, there were also those who don’t support the new incentive.

RBC chief economist Craig Wright called it the solution searching for a problem. Meanwhile, David MacDonald, senior economist for the Canadian Centre for Policy Alternatives, believes it’s only one more form of debt that needs to be repaid later.