The federal Liberals are having second thoughts about a 2015 campaign promise out of concern that expanding the popular Home Buyers’ Plan would throw fuel on overheated housing markets.
An internal document suggested that high housing prices are a key reason the Liberals don’t appear to be in a hurry to fulfill an election pledge that would enable Canadians to dip back into their registered retirement savings to help pay for a home.
The detail surfaced as policy-makers considered new measures aimed at cooling real estate markets and to slow the rise of record-level household debt loads, The Canadian Press reported.
During the election campaign, the Liberals promised to expand the Home Buyers’ Plan to permit those affected by major life events — death of a spouse, divorce, or taking in an elderly relative — to borrow a down payment from their RRSPs without incurring a penalty.
The current plan allows first-time buyers to borrow up to $25,000 tax-free from their RRSPs to put toward the purchase of a home. The amount must be repaid within 15 years.
The Liberal government unveiled its housing plan late last month, but home ownership only got a passing mention in the strategy. The plan committed to spending billions to build up Canada’s stock of affordable rental housing — a strategy Social Development Minister Jean-Yves Duclos is expecting to put downward pressure on housing prices.
Organizations like the CREA, however, argued the government should be doing more to help more people make down payments.
The association, which represents more than 100,000 real-estate brokers and agents, is now lobbying Ottawa to create intergenerational RRSP loans that would give parents the option of helping their kids buy a home by allowing them to tap into their retirement savings. The group is also pushing for the maximum withdrawal limit to be increased by $10,000.
Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate