David Eby, MLA for Vancouver-Point Grey and BC NDP critic for housing, is skeptical about the provincial government’s BC HOME Partnership plan, which was announced Thursday morning.
“I’m astounded that the government’s response to the housing crisis and a situation faced by young people trying to get into the housing market was to suggest that they borrow more money and the government would provide them with the opportunity to get into further debt,” Eby told Daily Hive.
The BC HOME Partnership will contribute to the amount first-time homebuyers have already saved for their down payment.
The program will provide up to $37,500 (or up to 5% of the purchase price) with a 25-year loan that is interest-free for the first five years.
The loan is only eligible for homes that are purchased at a price of $750,000 or less.
“What this does really is it significantly increases demand for housing under the $750,000 level across the province which will increase the cost of housing because there is a fixed supply,” said Eby.
For Eby, solving the housing crisis means increasing housing supply.
“There is a way to deal with the housing crisis and the answer is housing supply. We have never had a problem with housing demand in many parts of British Columbia,” said Eby.
“But what this program does is it encourages additional demand when the supply of affordable housing continues to be a problem.”
Christy Clark wants first time buyers struggling with record debt levels to take a 2nd mortgage for a down payment. Merry Xmas Mr. Rennie.
— David Eby (@Dave_Eby) December 15, 2016
“The government could be using all types of public land that they own to build affordable housing (…) for many different income groups and first-time homebuyers because land is the reason that housing is so expensive,” he said.
Eby admits that if he was a first-time homebuyer looking to get into the market he would feel persuaded to apply for the loan.
“I certainly wouldn’t blame anyone for taking advantage of the program,” he said.
Eby’s main concern stems from the possibility that BC’s young homebuyers will be pushed further into debt by taking on these loans.
“The cohort of people that are targeted by this program have record levels of debt already. And this is asking them to take on one more mortgage to get into a housing market that they can barely afford.”
Daily Hive spoke with Premier Christy Clark earlier today about the possibility of first-time homebuyers running into financial trouble once they have to start paying back the loan, but she was confident that would not be an issue.
“Well, they don’t have to pay [the loan] back right away. It gets rolled into your 25-year mortgage,” Clark said. “Having the $37,000 spread over 25 years in terms of paying back, I don’t think is going to pose a significant hardship.”
But for Eby, Clark’s plan is “shortsighted and cynical.”
“The concern that I have is that this is going to make a serious problem that we have in the housing market even worse and it is going to increase the risk of default on major levels of debt people have when interest rates finally go up, and they are going up,” Eby said.
“It’s a very shortsighted program that assumes that things will continue the way they have forever and we know from history that it is simply not going to happen.”