CMHC Says Housing Prices Unlikely To Rise Drastically Due To FTHBI

CMHC Housing Price
Image by Nattanan Kanchanaprat from Pixabay

The Canada Mortgage and Housing Corporation (CMHC) doesn’t want Canadians to worry about the new First-Time Home Buyers Incentive (FTHBI) making housing any more unaffordable than it already is.

In a statement on April 4, Canada’s housing agency said the inflation effect of the FTHBI is unlikely to exceed 0.2 to 0.4 per cent.

READ: Federal Budget 2019: New Incentives For First-Time Buyers

According to the CMHC, more drastic measures, like loosening up on the mortgage stress test or increasing amortization periods would have led to a much larger increase.

The government’s housing plan, which was released last month, sees buyers with a household income of less than $120,000 receive five per cent off of their mortgage on an existing home from the CMHC. Ten per cent of the mortgage on a new home is also covered under the new rules, so long as the home is priced under $480,000.

READ: CMHC Aims To Raise An Extra $100M For Housing On Top Of Gov’t Funds

On Wednesday, the CMHC also announced plans to raise an additional $100 million for national housing. The Crown Corporation told Canadian Press that despite the government’s $40-billion housing strategy, the investments aren’t enough.

CMHC chief executive, Evan Siddall, says the $100 million will most likely come from private sources and will be used to boost affordable housing initiatives.

NOTE: An earlier version of this article incorrectly stated that the CMHC predicted prices will go up by 0.2-0.4 per cent. The CMHC actually stated they are not expecting prices to increase by more than 0.2-0.4 per cent in response to the new first-time home buyers incentive.
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