New federal home buyer rules could increase house prices, Sudbury real estate agent says
2019 federal budget includes incentives for first-time home buyers
A Sudbury, Ont. real estate agent says federal changes to entice first-time home buyers could increase the price of housing.
On Tuesday, the 2019 federal budget was released. In it, a new program called The First Time Home Buyers.
The government is earmarking $1.25 billion over three years for something it's calling a "shared equity mortgage." That means the Canadian Mortgage and Housing Corporation would buy up to a 10 per cent stake in the purchased home, reducing the size of the mortgage.
Buyers would see their monthly mortgage payments reduced, and the government would get its stake back when the house is later sold.
Home buyers would also be able to borrow a bigger amount from their RRSPs to make down payments. The maximum amount would go from $25,000 to $35,000.
Darren Leblanc, a real estate broker with ReMax in Sudbury, says there are a lot of unanswered questions about the program.
"It's a double edged sword," he said. "It's going to make it more affordable for [first-time buyers] to get in but it could push up prices for everyone else in the future."
He points out in the past when interest rates went down making the market more affordable, housing prices went up.
Leblanc says he also questions how long the program will be in place.
"Will this program stay around or is it going to be a short-term program and, if the program ends, does it mean you have to pay back that loan immediately?," he said.
"There's a lot of unknowns."
Leblanc would rather see mortgage rules relaxed, however the budget doesn't address that issue. He says the current rules keep a lot of first-time buyers out of the market.
"I see a lot of good hardworking young Sudburians, even a lot of Sudburians for that matter, where they can't get into homes or mortgages because of the tougher mortgage rules lately," he said.
"Is the loan the answer? I don't know."
The government also boosted a fund to help finance the construction of more rental housing across the country.
With files from Kate Rutherford