Vancouver’s interest-free loans for homebuyers risk fuelling debt binge and even higher pricesDecember 19, 2016 9:38 pm
A Canadian province has an unusual offer for first-time buyers struggling to enter one of the world’s hottest property markets — a cheap loan to bulk up their down payment.
It’s a gift that may end up fuelling a Canadian debt binge and padding the pockets of sellers instead.
If there’s no new supply, giving people more money just leads to higher prices.
Starting Jan. 16, British Columbia — home to Vancouver, the nation’s most expensive real estate market — will start a program to match the nest eggs saved by buyers for their first house by up to $37,500 or 5 per cent of the purchase value.
“If there’s no new supply, giving people more money just leads to higher prices,” said Tsur Somerville, an economist focused on real estate at the University of British Columbia. Andy Yan, director of Simon Fraser University’s City Program, said, “What does this $37,000 enticement do but encourage people to take on more debt?”
Categorized in: Financial Post