The Canadian government’s recent announcement regarding changes to support first-time homebuyers appears promising on the surface. However, a deeper examination reveals a disheartening reality. While every effort to ease mortgage qualifying criteria should be applauded, the announced measures fall short of addressing the core issues plaguing housing affordability in Canada.

Let’s dissect the key changes and shed light on their shortcomings.

Effective April 16th, 2024, the maximum amount that first-time buyers can withdraw from their Registered Retirement Savings Plans (RRSPs) to purchase a home has been increased from $35,000 to $60,000. This increase in the RRSP withdrawal limit is a headline-grabbing move. Yet, its practical impact is questionable. It’s highly unlikely for a first-time homebuyer to require access to $60,000 for a down payment. Additionally, the majority of first-time buyers haven’t accumulated such substantial sums in their RRSPs, even more so now that they have the option of the First Home Savings Account. Furthermore, repaying a $60,000 withdrawal from an RRSP over 15 years entails a monthly payment exceeding $300, posing a significant financial burden that may become unmanageable as first-time homebuyers navigate life’s evolving demands.

In addition to this change, starting August 1st, 2024, first-time homebuyers who purchase newly built homes will be allowed longer amortization periods on insured mortgages. These buyers can now have up to 30-year amortization periods, up from the previous 25-year period. This seems out of touch with the needs of aspiring homeowners. The reality is that the majority of first-time buyers aren’t flocking to new builds due to their higher costs. They seek more affordable options to enter the market promptly.

In summary, these actions appear short-sighted and fail to genuinely enhance housing affordability and accessibility. While any effort towards change is appreciated, it’s disheartening to witness yet another unbalanced policy shift by our federal government, prompting a significant eye-roll.