A short-lived and little-used loan program for first-time homebuyers in B.C. is coming to an end. Applications under the B.C. Home Owner Mortgage and Equity Partnership will be accepted until the end of March.
Current borrowers under the program will not be affected, a B.C. Housing official said in a statement on Thursday.
“A review of the program indicates that it’s helped far fewer first-time home buyers than expected.”
The previous B.C. government brought in what was to be a three-year, $700-million program to help qualifying first-time homebuyers with a down payment loan of up to $37,500, or up to five per cent of the purchase price. Loans are for an initial 25-year term, which is interest and payment free for the first five years. The loan is registered on the property title as a second mortgage.
It had been expected to help about 42,000 people buy homes. But after one year, fewer than 3,000 loans were approved, the province said.
The decision to wind down the loan program comes as the government announced in its budget this week that it was rolling out a multi-pronged effort to build a range of housing and to work on developing ways to help people buy homes.
The loan program was criticized for encouraging newcomers to the market to take on more debt. In the sixth year of the loan, participants would begin payments with interest at current rates. That brought an element of risk because of the possibility of rising interest rates.
The B.C. Real Estate Association said in a Feb. 13 report that the program paid or approved only 1,395 transactions by September 2017. That represented 1.7 per cent of total B.C. home sales and 0.9 per cent of dollars spent.
Greater Victoria accounted for six per cent of all the program’s sales, the association said.
