CMHC scraps incentive program
Canada's federal housing agency is scrapping a shared equity initiative intended to help make it easier for first time buyers to crack into the housing market.
A notice on Canada Mortgage and Housing Corporation's website says interested parties have until midnight EST on March 21 to submit or update applications for the First Time Home Buyers' Incentive (FTHBI). After March 31, the program will no longer approve new requests.
The program was first rolled out in September 2019 to bolster home ownership among first-time buyers. It was a key initiative under the National Housing Strategy.
The program offered prospective homeowners an interest-free loan ranging from 5 per cent to 10 per cent of the property's purchase price, with the government taking a stake in the property's equity, subject to an annual cap of 8 per cent on gains or losses.
The primary objective of the FTHBI was to alleviate the financial pressures faced by homebuyers, enabling them to secure smaller mortgages and, consequently, more manageable monthly payments.
Participants in the program were required to settle the loan and a portion of any equity gains upon the sale of the property or at the 25-year mark, whichever occurred first. Additionally, the program offered the flexibility of early repayment without incurring any penalties.
Though the FTHBI aimed to assist first-time homebuyers, it faced criticism for its limited impact, particularly in highpriced markets.
Critics also took aim at its complex structure, restrictive eligibility criteria, the requirement to share equity with the government and concerns about long-term financial implications for homeowners.