Federal minister Jonathan Wilkinson tours a housing project under construction in Saanich near Uptown with designing architect Joseph Kardum of Koka Architecture. The 881 is a Kang and Gill Construction Project in the 800 block of Short Street with 61 units. (Wolf Depner/News Staff).

Minister says program promises help to first-time Victoria home buyers

Head of the Greater Victoria builders says mortgage stress test still hurting first-time buyers

A federal minister says a new program first announced during the 2019 federal budget will help first-time home buyers, a claim questioned by the head of Greater Victoria builders.

Standing outside a housing project under construction in Saanich near Uptown, Jonathan Wilkinson, federal minister of fisheries, oceans and the Canadian Coast Guard, re-announced the first-time home buyer incentive, which he predicted will help middle-class families take steps towards home ownership by reducing monthly mortgage payments without increasing the amount needed to save for a down payment.

RELATED: Federal ministers pop up across Greater Victoria

The program allocates $1.25 billion over three years to first-time home buyers with qualified annual household incomes of up to $120,000. The program would help about 100,000 homeowners save up to $286 on their monthly mortgage payments.

Wilkinson said the first-time home buyer incentive is a tool that allows would-be buyers to purchase homes in ways that are “much more sustainable” for young buyers and families.

“It is a way to enable first-time home ownership that is creative and thoughtful, and does not have the same kind of challenges that we had previously.”

The program announced during the 2019 federal budget came after the federal government had introduced the so-called mortgage stress test in 2018 to help slow down escalating real estate prices. Its critics claim that the mortgage test has made it more difficult for Canadians to enter the housing market. The British Columbia Real Estate Association, for example, argued that without the stress test, home sales in B.C. would have been about 7,500 — or 10 per cent higher — in 2018.

RELATED: Bank of Canada lowers qualifying rate used in mortgage stress tests

This context has led to suggestions that the government introduced the incentive program (which co-exists with other measures) to ease the political pain of the mortgage stress test, a claim Wilkinson rejects.

Wilkinson said everybody agrees that home ownership is a positive. “But you need to do it in a responsible way,” he said. “The stress test was introduced because we were concerned about getting to a point where people were taking out mortgages that perhaps they couldn’t afford if interest rates were up, even marginally. We also saw what happened in the United States in 2008, when we had some similar issues.”

During his opening remarks, Wilkinson cited a Canada Mortgage and Housing Corporation study from early 2017 that found Victoria was the least affordable small city in Canada, with the median house price eight times higher than median household income. Other surveys have found comparable findings.

“With the steep rise in housing prices and rental rates, there is no doubt that housing affordability is increasingly one of the most important issues on the south Island,” he said.

Casey Edge, executive director of the Victoria Residential Builders Association, questions whether the program will make any difference.

With the stress test, he said the federal government reduced the purchasing power of home buyers by 20 per cent during a period of declining interest rates, only to offer them a loan program later.

”Why not remove the stress test so people can buy the home they can afford?” he said. “HSBC offers a 10-year fixed rate at 2.99 per cent. If a buyer chooses that option, why should they qualify at the Bank of Canada’s five-year rate at 5.14 per cent? In fact there is no justification for a mortgage stress test. They have eroded affordability and now act like they are doing everyone a favour with an equity loan.”


Like us on Facebook and follow us on Twitter

wolfgang.depner@saanichnews.com

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Food safety a good practice amid COVID-19 concerns

BC Centre for Disease Control offers useful food safe information for households

Sidney’s top emergency official says he is not aware of any COVID-19 cases in the community

The public Sunday also heard of future plans to help local businesses through tax deferments

COVID-19: Victoria plumbing company dedicates van for grocery delivery

The Super Plumber uses van to pick up groceries for those in need during COVID-19 pandemic

Digitization of Peninsula News Review by Sidney Museum and Archives preserves historical legacy

Searchable database will ease research and preserve integrity of records

COVID-19: A message from the publisher

We will be making some changes to our print editions during these unprecedented times

Evening world update: U.S. restrictions extended 30 days; NY deaths near 1,000

Comprehensive world update, with the latest developments in the COVID-19 crisis

‘It’s up to us: Recently-returned B.C. couple urges Canadians to take COVID-19 seriously

Garrett Kucher and Tory Apostoliuk make it home after almost a week of lockdown in Spain

‘Nothing concrete’: Tenants, landlords lack details after B.C. unveils COVID-19 rental aid

Single mom in Golden says she’s already going to the food bank after being laid off

Canada will make sure masks sent by China meet quality standards: Trudeau

Chinese Embassy tweeted that China was sending 30,000 medical masks along with gowns, gloves and goggles

B.C. issues guidelines about distancing, reusable bags to grocery stores amid COVID-19

Hand sanitizer and markers to keep lines two metres are apart are needed, province says

No plans to call in military right now to enforce COVID-19 quarantine: Trudeau

Trudeau unveils $7.5M for Kids Help Phone, $9M for vulnerable seniors amid COVID-19

QUIZ: How much do you know about the Olympics?

Put your knowledge to the test with these 12 questions

Most Read