B.C. Government Offering Down Payment Loans to First Time Home Buyers

Much has been made about Metro Vancouver’s housing affordability issues. The deluge of articles, stories, and cocktail chit-chat are enough to make even a 4 year old roll his eyes. To combat the affordability issues, the BC government is rolling out a new program aimed at first time home buyers. The government will match down payments of up to $37,500 made by first time buyers, up to a maximum cost of $750,000. The 25 year loans carry no interest for the first 5 years, however they are only available to buyers who commit to living in the property for at least the initial 5 years.

While the move has been celebrated by many young working families who are trying to scrape together enough funds to put a down-payment on their first home, the question remains; does this really solve the problems of Vancouver’s overheated housing market? Many are skeptical, including us.

One of the main issues in the Metro Vancouver area is that demand has outstripped supply, leading to rapid price increases. Yet this measure does nothing for supply, it only increases demand (although how much we are not sure). This measure may also increase the risk for those most vulnerable. If you were struggling to get a down payment on a $500,000+ condo, how easily is it going to be for you to make the mortgage payments? Especially if (when) interest rates rise? This could easily lead some people to stretch themselves beyond their means, and with so little equity in the house it wouldn’t take much for the mortgage to end up under water (owe more than the house is worth).

So while this measure may help a few families, and we are more than happy for them, it does little to solve Vancouver’s problems. As with any political measures taken, it’s important to ask yourself, “when is the next election?” to determine whether or not the actions taken are meant for the good of the communities they serve, or to get themselves re-elected.


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