Mortgage rules need to change for first-time home buyers, report says

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A new report suggests specific policy changes could help many first-time home buyers who find it challenging to get into home ownership.

Housing affordability continues to be a key issue for millions of Canadians, and a new report suggests specific policy changes could help many first-time home buyers get into home ownership.

The National Housing and Investment Initiative, a collaboration of members from some of Canada’s biggest banks and real estate groups, released its November report with several recommendations for what it says can help create a more sustainable housing market.

This comes as sales dwindle in some of Canada’s biggest markets, like Toronto, as prices remain high and available supply is falling behind demand.

But some experts are skeptical about the report’s proposed potential benefits outweighing the risks for the housing market and overall affordability.

“We have to ask, are there any risks coming from these recommendations that could undermine the other factors that are happening right now to put a downward pressure on home values, which is what we want to restore affordability over the medium and long term,” says Paul Kershaw, policy professor at the University of British Columbia and the founder of the advocacy think tank Generation Squeeze.

“Even if we implement most or all of these recommendations, we’re still not talking about restoring housing affordability throughout our housing market, our housing system for many, many years.”

One of the report’s recommendations is to make it easier for young Canadian first-time home buyers to afford a down payment on newly constructed homes. This includes both by lowering the required down payment for first-time buyers and establishing an assistance program, like a low-interest loan, to help these potential buyers afford their down payment.

But making it easier for buyers to get into the housing market without increasing supply simultaneously can risk higher prices for homes in the long term.

The report says that by limiting these financial supports to new homes, it will avoid inflating the resale market.

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