VICTORIA — First-time homebuyers struggling to cobble together a down payment for a home could soon get an interest-free loan from the B.C. government, a move some experts say undermines Ottawa’s attempts to curtail risky mortgages to overstretched buyers.
Premier Christy Clark announced Thursday that a new provincially backed loan program would match the amount a first-time buyer has saved for a down payment — up to $37,500, or five per cent of the home’s purchase price.
Clark painted the move as an attempt to help middle-class British Columbians overcome the hurdle of saving for expensive down payments. Not everyone has a parent they can borrow money from to get into the housing market, and some need government’s help, she said.
But down-payment requirements, set by Ottawa to curb risky lending, exist to weed out buyers who might overextend themselves on properties they can’t afford if interest rates increase.
“I hate it. To be very clear, I think it’s really bad economics,” said Tom Davidoff of the University of B.C.’s Sauder School of Business.
B.C. first-time homebuyers loan program sparks debate, concern