Ottawa is introducing a pair of measures, as part of its economic fiscal update, to help Canadians get a foot into the housing market. The First-Time Home Buyer Incentive is a shared-equity mortgage to reduce payments, with the Government of Canada taking on 5-10 per cent of the loan on a new home and 5 per cent on a resale home or mobile home. It’s being expanded for the high-priced Toronto, Vancouver, and Victoria markets.
This guarantees a further spike in prices since sellers are fully aware that the generous government will gladly pay them 10% of the price.
“In general, these ‘affordability’ measures just stimulate demand and bump prices further,” BMO senior economist Robert Kavcic told Yahoo Finance Canada.
The banks won't mind as they dole out fatter mortgages.