Not a lot of real estate buyers across Canada are interested in the latest government buying scheme. Government of Canada (GoC) data shows the First-Time Home Buyer Incentive (FTHBI) received a cold reception. From the launch of the program, to the beginning of December, only two provinces represented the majority of applications. Those two provinces, ironically, were home to some of the most affordable real estate in the country.
First-Time Home Buyer Incentive
The First-Time Home Buyer Incentive (FTHBI) is a shared-equity mortgage program. The Government of Canada will provide funds for 5 to 10 percent of your home, depending on if it’s a resale or a new home. The government then shares the upside and downside of the home’s value. That is, if you lose money when you sell – the government will shoulder part of that loss. If you make money, you’ll pay the government a portion of the profits, proportional to their stake. We’ve covered the history of these programs before, and how its traditionally used to stimulate demand – not improve affordability. So we won’t bore you with a full rehash.
The FTHBI Only Delivered $51.3 Million In Funds
The FTHBI incentive is off to a slow start, except in Quebec. The program delivered just $51.3 million in funds from September 2 to December 9, 2019. Quebec represented the largest segment, borrowing $18.74 million over the period. Alberta followed with $16.30 million, and Ontario was a distant third with just $7 million borrowed.
First-Time Home Buyer Incentive
The dollar value borrowed through the First-Time Home Buyer Incentive (FTHBI), from September 2 to December 9, 2019.
Source: Government of Canada, Better Dwelling.
Two Provinces Represent The Majority of Applications
Only two provinces make up the majority of applications – and approvals. There were 3,252 applications across all of Canada, with 2,730 approved. Quebec represents 1,360 of those applications, with an approval rate of 86.1%. Alberta is the second largest number of applications with 809, and has an approval rating of 83.9%. Ontario is a distant third with 436 applications, and an approval rating of 80.2%. Just Quebec and Alberta make up the majority of applications.
First-Time Home Buyer Incentive Applications
The number of applications and approvals for the First-Time Home Buyer Incentive (FTHBI), from September 2 to December 9, 2019.
Source: Government of Canada, Better Dwelling.
British Columbia real estate buyers were surprisingly not interested at all. Just $2.1 million of funds were used in the province over the two month period. Only 151 applications were made, with an approval rating of 77.4%. The B.C. market wasn’t close to the top or bottom of the ranks. A little surprising, since real estate makes up such a large portion of industry in the province.
The FTHBI is receiving a lukewarm reception across most of the country. The introduction of this program fired up a lot of speculators, hoping to capture the extra money. However, it may not have the long-term impact the government or speculators hoped for.
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The CMHC is underestimating the influence these programs have on price, since they’re calculating strictly as a capital injection model. In a period of high exuberance, anticipation of money boosts prices.
I’ve actually seen multiple real estate agent news letters telling investors this program was going to boost prices, so they should get in first. Explains a lot of the sales volumes in October, but I don’t see how this lasts. Especially when almost none of the demand was in BC.
Did the Toronto/Vancouver/Victoria increase go live yet? If so, they should be cancelling it.
Well if Quebec is suffering from whack-a-mole in Vancouver, good on them for using the program. Let them use all the cash.
Is this what people call pushing on a string?
could you post a link to the data source?
There is no publicly available source. I’m assuming this is a direct release from the government.