Government’s first time homebuyers program isn’t as popular as planned

The federal government’s program developed to help first-time homebuyers still helps far fewer Canadians than it was planned, the new data from the Parliament shows.

The first-time-homebuyers program, introduced on September 1, 2019, was created with a $1.25-billion budget for 3 years. It’s administered by the Canada Mortgage and Housing Corporation.

On November 31, 2021, having passed the middle of its term, the program provided only $247.1 million to 13,961 buyers.

In March 2021, only about 10,000 buyers used the government’s program.

According to the report, the most successful applications were in case of mortgages for $150,000-$350,000, which is extremely lower than the average real estate price in Canada’s largest cities.

Initially, the program was supposed to help 100,000 Canadians, as the federal officials stated. The program provides a shared-equity mortgage. Qualified borrowers can get 5% or 10% of a home’s purchase price in a form of loan and use it for a down payment, thus reducing the amount of monthly payments.

Borrowers who want to use this program need to earn less than $120,000 a year in most cities. The total mortgage amount is limited to four annual incomes of a potential buyer. Trying to make the program more accessible in major cities with high home prices, the government changed the criteria last fall for Vancouver, Victoria, and Toronto.

Starting May 3, 2021, buyers in those census metropolitan areas have been facing  higher eligibility limit. The income cap went up to $150,000, and the total value of the mortgage was raised to 4.5 annual incomes.

In June 2021, Ottawa believed the changes would “raise the number of eligible first-time homebuyers by several thousand,” a spokesperson for former Families minister Ahmed Hussen noted. Today, Hussen is Minister of Housing, Diversity and Inclusion.

Last year, the government promised a “more flexible First-Time Home Buyer’s Incentive”.

“In my opinion, the program has its flaws,” – said Jenny Kwan. The income and mortgage limits mean “there are many properties that can’t qualify.”

“You need to solve the core of the issue, to reduce the cost of housing and not necessarily use mortgage subsidies,” – she noted.

Prices are skyrocketing in Canada. Last month, the average home price in the Greater Vancouver Area and the Greater Toronto Area reached $1.26 million, marking 18.5% and 33% annual gains, respectively. The average real estate price in Victoria rose by 25% on a year-over-year basis to $920,000. Home prices in Edmonton and Calgary also showed increases, but not even close to the ones stated above. Calgary home prices were up by 11.4% to $460,000. Edmonton reported a 5.2% increase to $340,000.

Such results show how widely unpopular the program is in many large cities.

In case of Victoria, only 12 homebuyers qualified for the program, Vancouver showed 13, Toronto reported 66. The program is most popular in Edmonton (2,096 successful borrowers), Calgary (986), Winnipeg (889), Quebec City (644), Montreal (366), Halifax (362), and Saskatoon (310).