New housing initiatives valued at $8.5 billion and designed to boost the real estate market were released in the recent Federal Budget.
The Government’s biggest promise was a pledge to construct 3.87 million homes by 2031.
Buyers will also be allowed to withdraw up to $60,000 via the Registered Retired Saving Plan (RRSP) Home Buyers’ Plan to help ease the pain of purchase as the nation’s housing stock continues to retain its high-value levels.
Previously, Canadians were allowed to withdraw a maximum of $35,000 to contribute to their down payments.
The Home Buyers’ Plan permits tax-free withdrawals from buyers’ RRSPs, but they must be paid back over a maximum of 15 years.
As an experienced agency in your area, we understand that creating momentum in the housing market is a tough nut to crack with government policy. The steps announced in the budget are a positive move and will help put properties within reach for many buyers.
The Liberal Government budget also said it would allow first-time homebuyers with an insured mortgage to extend amortisations to 30 years when buying a new home. Usually, these are restricted to 25 years.
The aim is to reduce the monthly mortgage cost for first-time buyers. However, by stretching out the amortisation to 30 years, this group of buyers will end up paying more in interest charges.
We believe this change is likely to have a limited impact because it will only apply to insured mortgages relating to newly built homes.
When handing down the budget, Finance Minister Chrystia Freeland said: “Faced with a shortage of housing options and increasingly high rents and home prices, many younger
Canadians feel that the dream of homeownership is just that, a dream.
“Our government is changing that.
“We want home ownership to be a reality for younger Canadians.”