On the day of the launch of the new BC government down payment loan program for first-time home buyers, housing minister Rich Coleman responded to critics of the initiative by saying, “To be able to get into your first home and stabilize your family is a good thing.”
Coleman told media at the January 16 press conference, held on the official launch day of the Home Owner Mortgage and Equity (HOME) Partnership, that because of the province's financial stability, it was in a strong position to help would-be buyers get into home ownership. “We want to be part of that, to help people get into their first home and change their lives,” said Coleman.
He also told media that more than 60 applications have already been received and eight have so far been approved for the loan.
The HOME Partnership scheme offers first-time buyers a down-payment-matching loan of up to five per cent of the property purchase price, to a maximum of $37,500, on homes of up to $750,000. The loan is interest- and payment-free for the first five years, and is registered as a second mortgage on the property. After five years, the loan must be repaid at current interest rates.
Some critics, including Tom Davidoff, professor of economics at UBC’s Sauder School of Business, have argued that this is a contradictory policy for a government that seems to have been trying to reduce home prices (through the foreign buyer tax), as the new loans could conversely increase prices and end up only benefitting home sellers, as buyers might simply bid more for homes with their extra cash.
Others have advocated caution to buyers considering taking out such a loan, as it might not benefit everyone in the same way, depending on their financial circumstances.
However, others have been in support of the move. The Urban Development Institute said that it was a laudable use of the extra revenues the BC government has enjoyed through increased Property Transfer Tax payments, caused by high home prices.
To find out more and apply for the loan, click here.
