Liberals Would Relax HBP Rules

RRSP HBPBorrowing RRSP funds to buy a home would no longer be restricted to first-time buyers under a Liberal government, the party announced today.

Liberal leader Justin Trudeau has proposed that restrictions on the Home Buyers’ Plan (HBP) be loosened to allow greater access to the program for those facing challenging or unexpected circumstances.

“We will modernize the existing Home Buyers’ Plan so that it helps more Canadians finance the purchase of a home,” says the Liberal’s housing policy. “We will allow Canadians impacted by sudden and significant life changes, such as job relocation, the death of a spouse, marital breakdown, or a decision to accommodate an elderly family member, to access the program and use money from their Registered Retirement Savings Plan to buy a house without tax penalty.”

The plan would not change the maximum withdrawal limit of $25,000, however. Some call that a mistake as the HBP has failed to keep pace with rising home values. Since the HBP started in 1992, home prices have rocketed over 200%, while the withdrawal limit has risen just 25%. That’s the very reason Conservatives recently promised to raise it to $35,000.

“I think our proposal to extend the capacity to invest — to draw from your RRSPs…responsible amounts to help the cost of a new home — is something that will help Canadians in concrete ways,” he was quoted as saying. “The reality is that too many Canadians cannot afford to buy a house.”

Like the Conservatives, the Liberals are also promising to “undertake a review of escalating home prices in high-priced markets — like Vancouver and Toronto — to determine whether speculation is driving up the cost of housing, and survey the policy tools that could keep home ownership within reach for more Canadians.”

  1. I suppose we should be grateful that neither the PC’s or the Liberals are committed to offering solutions to the perceived real estate crises in Toronto and Vancouver, without first promising to study the issue in depth. Assuming of course, that one or both of them form the government after Oct. 19.

    In any case, I fervently hope that when they eventually discover that the issue at hand is supply and demand, they will have the wisdom to stay the hell out of the way.

  2. I don’t know the details of what Trudeau is proposing but it seems like a small bandage for a huge problem. I won’t get into that. . . but the first thought I had when reading this is that it would increase the already “existing problem” of Canadians not having enough investment income/pension for Retirement??

    Being in the mortgage industry, I think the majority of us have seen an alarming amount of people in their 40’s and up, with very little saved for retirement. I can confidently say that this proposal would only increase the use of what precious little this age group has managed to save, which can’t be a good thing.

    Much like low interest rates, this is a dangling carrot to get into more debt than is financially healthy. Additionally, it is highly likely to create a problem in future decades when their depleted investments catch up with them. They may repay what they used, but will they add anything to their portfolio during the same time period? For many. . . . probably not.

  3. I have to say that I am very impressed with the Canadian Green Party platform that was announced yesterday. I haven’t read the whole thing, but the costed budget appears to be extremely well prepared. It contains an awful lot of common-sense solutions which is extremely refreshing to see from a political party. I tend not to listen to campaign promises – they are so often broken. You can find the Green Party platform and budget at :

  4. Let me get this straight. Under the Liberal proposal, someone who currently owns or has previously owned a home would be able to dip into their RRSP funds without risk of taxation in order to purchase a new home…supposedly under unique circumstances. If someone at that stage in their life cannot afford to purchase a home without having to resort to this, perhaps they have no business buying a home…especially if the equity they have built up in their current or previous home, along with their income cannot qualify them. So JT is encouraging Canadians to risk blowing a significant part of the their retirement savings on real estate, even though there is a pretty good chance they will not be able to pay themselves back under the HBP rules. And yet Liberal Premier Wynne says Ontarians need the ORPP because they will have insufficient savings for retirement??? How ironic. JT is so desperate to buy votes he is encouraging financial irresponsibility at the individual level. Imagine how reckless he would be if put in charge of the nation’s finances. Perhaps JT should learn from Ben Mulroney’s example and become a TV persona rather than try to follow in his father’s footsteps as PM.

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