Feds’ homebuyer incentive won’t help people in need: expert

A Saskatchewan-based mortgage specialist says a federal incentive for first-time homebuyers isn’t going to help the people who really need it.

The incentive announced in the 2019 federal budget would provide interest-free loans of up to 10 per cent of the price of a newly built home, or five per cent for an existing home to first-time buyers who qualify for a mortgage.

The loan would need to be paid back to the Canada Mortgage and Housing Corporation (CMHC) when the house is sold.

Families will be limited to buying a home that is less than four times as expensive as their annual income, and any household earning more than $120,000 won’t be eligible for the program.

Mortgage Group broker Carrie Cardinal told 650 CKOM Tuesday the incentive may help people who have already saved up a minimum five per cent down payment, but it won’t help the people who need the most assistance getting into a home.

“I’m not standing on the rooftops screaming ‘this is a great thing,'” she said.

Cardinal said previous tweaks to federal lending rules have eliminated many interested buyers from the market. In particular, she pointed to a stress test requiring borrowers to show they can afford payments at interest rates two per cent higher than their current rate. She said the incentive in the Liberals’ 2019 budget doesn’t address the issue.

“It’s not going to help people qualify (for a mortgage), and that’s our biggest challenge.”

While the incentive would lower monthly payments by allowing people to put down larger down payments, Cardinal said it does nothing for those struggling to save up enough for a minimum down payment.

“If I still can’t come up with that money, I’m no farther ahead by this incentive,” Cardinal said. “It almost feels like we’re chasing after a carrot on the end of a donkey.”