Would-be homeowners take advantage of partnership program, says province
Controversial program approved $1M in loans to 1st time homebuyers in 3 weeks
- March 25, 2017: More than 1,000 people have applied with $4.1 million in loans distributed
Since applications opened on Jan. 16, 2017, the province says more than $1 million in loans have been granted to first-time home buyers through its B.C. Home Partnership Program.
The program provides loans of up to $37,500 — up to five per cent of the purchase price — to help first-time home buyers fund down payments in the province's housing market with closing dates on purchases after Feb. 15, 2017.
The <a href="https://twitter.com/hashtag/BC?src=hash">#BC</a> HOME Partnership program will help bring the goal of home ownership within reach for many, <a href="https://t.co/kaOuvKEInB">https://t.co/kaOuvKEInB</a> <a href="https://twitter.com/hashtag/BCFirst?src=hash">#BCFirst</a>—@BCGovNews
"First-time home buyers are taking advantage," according to a written statement released Saturday about the program.
It said more than $1.1 million in loans has been conditionally approved for more than 250 applicants since applications opened.
"One problem about the program is that with the increased down payment, interest-free loan, you could actually be putting some inflationary pressures in the market as well," said Bryan Yu, senior economist with Central 1 Credit Union.
He says first-time homebuyers make up about 20 per cent of the province's market.
Home Partnership Program by the numbers:
- Actual applicant purchases: 67
- Applications received: 340
- Page views of program website: 60,000+
The program runs until March 31, 2020 and the province anticipates spending more than $700 million over the next three years to help an estimated 42,000 B.C. British Columbians "enter the market for the first time."
Academics have criticized the program saying it is a political move that only benefits people who most likely can already afford to get into the market.
Economists like UBC's Tom Davidoff said the early data released by the government does not break down if buyers in the program are using the loans to provide half of a five per cent down payment, or simply taking advantage of free government money.
The 25-year loan is interest free and payment free for the first five years.
Davidoff also worries if there is a price correction for housing in the province, that some people using the program may default on the government loan.
"We're at the top of the market today and the market may correct significantly, it's possible these loans will go bad," he said.