Four months after its official launch, CMHC’s First-Time Home Buyer Incentive had funded just 4% of its three-year goal, according to new data provided by the agency.
From the time the down payment assistance program launched on Sept. 2 to Dec. 9, CMHC received just 3,252 applications from across Canada, 2,730 of which were approved. That translated into total funding of $51.3 million—well off pace of the agency’s three-year target of $1.25 billion.
Under the program, the government will provide first-time buyers with an interest-free down payment loan of up to 5% for resale purchases, and 10% if the property is a new build. The CMHC then participates in any rise or fall in value of the home, and the loan must be repaid either when the house is sold or within 25 years.
Interest in the program was highest in Quebec, where 1,300 applications were received. Comparatively, just 436 Ontarians applied, according to statistics that were tabled in Parliament last week.
Here’s a look at the breakdown of applications from some of the major housing markets across Canada:
- Greater Toronto Area: 148
- Vancouver: 45
- Edmonton: 447
- Calgary: 260
- Winnipeg: 144
- Montreal 654
- Halifax: 64
- New Brunswick: 60
- PEI: 12
CMHC head Evan Siddall defended the results via Twitter on Friday:
“In addition to CMHC’s challenges in estimating demand for the FTHBI, uneven lender support is a complicating factor,” he tweeted on Friday. “It may also be evidence that there is less unsatisfied FTHBI demand due to the stress test than people claim. People can always buy less expensive homes.
Why is the FTHBI Unpopular?
Since the initiative was first announced in the Liberals’ spring budget, many in the industry have criticized it for being overly complicated and promising negligible benefits.
One of the biggest restrictions of the program is that it’s currently limited to purchases of up to $565,000. In markets like Toronto and Vancouver, buyers can be hard-pressed to find available properties under that threshold. According to recent data from the Toronto Real Estate Board, the average sale price in December was $837,788.
Many buyers have also expressed unease at the thought of giving up equity in their home, particularly with prices rising rapidly in many markets across the country.
While Prime Minister Justin Trudeau promised tweaks to the FTHBI during last year’s federal election, no additional updates have since been provided. The proposed changes would increase the maximum purchase price eligible under the program to $789,000 for buyers in Toronto, Vancouver and Victoria.
It remains to be seen whether the FTHBI’s slow start is a harbinger of future demand over the coming years, or whether first-time buyers will grow more receptive to sharing a chunk of their home equity with the government.
CMHC down payment assistance first-time home buyer incentive
Last modified: February 3, 2020
“Off to a slow start” is overly kind. I’d call this program a flop, a boondoggle, even a flimflam if you will! Evan should be ashamed!
I have good credit and going for a home thats only 120k mortgage will be less then my rent, im in ontario and chmc still wont approve me, this is the third year in a row I am getting denied. The government needs to work on making chmc approve more people, they are mostly where the problem lies for low income families.
Remove the b20, that’s the only way. You will still have to do it, but when you do the prices will go up 30% a year, and there is nothing you can do about it. Siddall should’ve been fired long ago!
Need that Vacancy tax as soon as possible.
Doesn’t help to first time home buyers. No more 5% down payment as well either A, B, & B1 lenders. Doesn’t help at all.
Income requirements are idiotic 120,000 limit makes many dual income households in thesse markets unqualifaible.
This will not solve housing inventory issues in large centers
The Government is trying to fool people into sharing your home equity by playing a shell game with our hard earned money! And offering almost nothing.