First-buyer assistance will have a limited impact on prices, calculates CMHC
In its report, CMHC argues that house prices could increase by 0.2% to 0.4% – a small increase compared to other ideas that have been suggested to the Liberals for make housing more affordable.
According to the agency, easing the stress test for mortgage loan insurance or allowing longer mortgages would have pushed home prices five to six times higher than last month’s budget.
The government said it would take 5% of a mortgage on existing homes for households earning less than $120,000 a year, in exchange for a stake in the home’s property.
On the new home side, the government would be willing to cover 10% of mortgages, but the cost of the mortgage and CMHC’s support should not be more than $480,000.
Despite limitations on the program, CMHC says it can operate in all markets, including Vancouver and Toronto.