Does Prince George need the First Time Home Buyers Incentive Program?

A First Time Home Buyer Incentive Program started by the Canadian Government has officially launched this week.

While he believes it could certainly help the country in the overall housing market, RE/MAX Centre City Realty’s Bob Quinlan doesn’t think Prince George necessarily needs it.

“It doesn’t make it a big deal here in Prince George because our property values are so much lower, so it is focused towards the larger centres: Vancouver, Edmonton, Toronto, spots like that,” Quinlan told MyPGNow. “However, it is going to have some benefits. I think it’s a good thing for our country.”

It is limited to people who earn under $120,000 a year, which could also see the Canada Mortgage Housing Corporation (CMHC) contribute up to 10 per cent of the price.

“From the perspective of a mortgage broker, I’m seeing it from the benefits of our clients as well as the lenders. It promotes the possibility for first-time buyers to get into a property with less of a down payment. In other words, the government will match the payment if they put five to ten per cent down.”

Buyers wanting to be in on the program won’t be able to go above ten per cent however as over 20 per cent would mean it becomes an insufficient loan to value ratio. Essentially the bank would be lending less value of the property, therefore the buyers don’t need CMHC.

“This program is set up so CMHC will help first-time buyers, they’ll match their downpayment, which at that point it will become a second mortgage, but it allows people to get into a property with less down, and that is a major advantage.

Quinlan, while the values of properties in the north are much cheaper, he does still believe the new program will have its fair share of benefits to potential buyers.

“It may take people into higher-priced properties because naturally when people have more money they want to spend it and if they have more available to them at a borrowing power then they can see a nicer home that they can now afford.”

The only requirement is that the total value of the mortgage plus the CMHC’s portion doesn’t exceed $480,000, which effectively means the program is available for properties worth a maximum of $565,000.

However, the program must be paid back within 25 years of if the buyer sells before that – but there is no financial penalty for buying the CMHC out of its stake.

Applications will be accepted on September 2nd for home sales that will close no earlier than November 1st.

With files from Brendan Pawliw, MyPGNow staff