The federal government’s housing agency is scrapping its controversial first time home buyers program and industry insiders are saying it won’t be missed.On Friday, the Canada Mortgage and Housing Corporation (CMHC) said the controversial program will be discontinued after March 31. Interested parties — if any — have until March 21 to file an application to qualify for the first time home buyer’s incentive.“This policy has been flawed from the beginning, so it is great to see it go,” Ratehub President James Laird said in an emailed statement to Western Standard. “It is a shame that it took them this long to admit the policy failure, but better late than never.”.“Allowing all consumers to amortize their mortgage over 30 years has always been a better way to help first time home buyers and would be an effective replacement for this program,”James Laird, Ratehub.The problem is, there haven’t been many takers since the $1.25 billion program was first introduced in 2019 as part of the Liberals’ so-called ‘national housing strategy’ that would see eligible homebuyers swap a portion of their equity to the CMHC in return for lower mortgage payments. It came with the caveat that it had to be paid back over 25 years or upon sale of the property. To the end of 2021, there had been fewer than 10,000 successful applicants — far short of the 100,000 target — with Edmonton and Calgary accounting for nearly 20% or 2,000 of that total, in part because it had some of the cheapest house prices in the country..In addition, Laird said the thresholds were far too high to have a meaningful impact. To qualify, buyers had to have annual incomes of $120,000 or less, with the combined incentive and mortgage capped at four times that annual income.While the thresholds were extended to $150,000 for Toronto, Vancouver and Victoria, the program only applied for insured mortgages with a purchase price of under $1 million, effectively shutting out buyers in Canada’s most expensive cities. .That’s notwithstanding that mortgage professionals universally agreed co-owning a home with the government wasn’t a very good deal to begin with. That shared-equity component meant the government would also benefit from the potential future sale of a home as it increased in value because “the government gets to enjoy the appreciation of the property while paying none of the expenses such as property tax, insurance and maintenance.”In addition, the program still required the borrower to come up with the minimum down payment, even as the government was cranking up those stress tests to avoid defaults.“Allowing all consumers to amortize their mortgage over 30 years has always been a better way to help first time home buyers and would be an effective replacement for this program,” Laird said.
