With the April 1, 2013 expiry of the first-time new home buyers’ grant looming, the experts at Envision Financial see the removal of this incentive having little effect on the local housing market.
The bonus, worth up to $10,000, has been available to qualifying home buyers who have never previously owned a primary residence anywhere in the world and who are buying or building a new or significantly renovated home. Mohamed Samman, vice-president of credit at Envision Financial, says those who qualified made up a very small number of buyers.
“Given the qualifying criteria, the first-time new home buyers’ bonus provided incentive for a limited number of people,” says Samman. “Most first-time buyers aren’t buying new. They’re looking for an affordable way to enter the housing market.”
Samman believes mortgage eligibility rules, which were tightened last year in the face of growing concerns about household debt and over-extension, are having a greater impact on market activity.
“What has had a bigger impact on the market over the last six to nine months is the stricter mortgage eligibility rules,” says Samman. “Shorter amortizations and increased down payment requirements have left some potential buyers on the sidelines. At Envision Financial we focus on helping our members, particularly young families trying to break in to the housing market, structure their financial lives in a way they helps them realize their home ownership dreams.”
While some would-be buyers have yet to enter the market due to the tighter mortgage rules, Samman notes others are biding their time and waiting for spring when there is traditionally more activity in the market.
“Although there has been a dip in market activity and housing prices recently, spring is traditionally regarded as home-buying season,” says Samman. “I don’t see this year being any different. Low interest rates continue to make buying an attractive option for some and as we approach home-buying season we expect to see an upturn in market activity.”