Contemporary design makes Zetter Place a standout

Simon Briault
The Vancouver Sun

Zetter Place

Project location: 8520 204^th Street, Langley

Project size: 82 townhomes, 1,232 — 1,978 square feet

Prices: From $419,900 for A plan (two-bed plus den); from $489,900 for C plan (three-bed with side-by-side garage); from $599,900 for B plan (four-bed)

Developer: Lanstone Homes

Architect: Focus Architecture

Interior designer: Area 3 Design

Sales centre: 8520 204^th Street, Langley

Hours: noon — 5 p.m., Sat — Thurs (Holiday hours: sales centre closed from Dec. 19 through Jan. 2)

Telephone: 778-298-2252

Website: livezetter.com

Occupancy: From January 2017

David and Deborah Ruggles consider themselves to be discerning homebuyers, so when they decided a few years back to downsize into a smaller place, they took their time to decide on exactly where they wanted to move to and to settle on a development they really liked.

“We’ve bought many, many homes in our lives — too many to even talk about,” said David Ruggles. “For this move, we had been looking around for a few years — everywhere from Gibsons to Kelowna, Tsawwassen, and Vancouver Island. But eventually, we decided that we really wanted to stay as close to home as possible and Langley is just one city over from Surrey, where we are now.”

“Downsizing is obviously a trend that started a little while ago and we’re going to jump on that bandwagon,” he added. “I reckon we probably know every piece of property in the valley and we put a lot of thought into what we want. We had our eyes on Zetter Place from the moment it came on the market.”

The Ruggles’ have bought a two-bedroom townhome at Zetter Place in the West Yorkson district of Langley. The development of 82 townhouses is the work of Lanstone Homes and Focus Architecture and the design of the buildings is proving to be one of the biggest draws for buyers, according to Lanson Foster, Lanstone’s founder and president.

“The typical townhouse that people have been building in the area for a while now has that craftsman, heritage look with gabled roofs and crown mouldings,” he said. “We’ve changed things up for this project with a West Coast contemporary design, which is still fairly new for Langley. It really fits into the landscape in B.C. and it’s been very popular with younger buyers.”

Ruggles would admit he is not one of those, but said that the look of Zetter Place was a big factor.

“Their tagline was modern urban design in a country setting and that’s really what got us interested — we loved the modern, clean interiors,” he added. “When we saw it, we knew it was exactly what we were looking for.”

Design features at Zetter Place that caught Ruggles’ eye include kitchens that come with stainless steel appliances by Whirlpool, including a five-burner gas range and convection oven, a refrigerator with bottom-mount freezer drawer, and a dishwasher with a trademarked AccuSense Sensor Cycle. There are contemporary, slide-out range hoods in stainless steel by Broan, a choice of white, shaker-style cabinets or slab door cabinets with chrome hardware and soft-close doors and drawers. The countertops are made from polished quartz and there are tile backsplashes, deep, double-bowl under-mounted sinks and single-lever, high-arc faucets with integrated spray functions by Grohe.

“We’re a smaller, boutique-style developer so we pay a lot of attention to the interior of our homes and the finishes we use,” said Foster. “I’m a second-generation homebuilder so I’ve grown up in the industry and I’ve been building for the past 25 years.”

Foster said that Zetter Place has attracted interest from a wide range of buyers because it offers a wide range of units. Homes range from 1,232 to 1,978 square feet and have two, three or four bedrooms. Most have side-by-side double-car garages.

Homes feature open-concept spaces and nine-foot ceilings on the main floors and large Energy Star windows throughout for maximum light. There are laminate wood floors and contemporary, flat-stock wood baseboards and door casings. The developers have also included lots of closet spaces finished with single-shelf white wire organizers.

Bathrooms have tile floors and bath/shower surrounds, single-lever, polished-chrome faucets and shower heads and trim by Grohe. There are under-mount, drop-in or vessel sinks, toilets by American Standard and powder rooms on main or ground floors. Ensuite bathrooms have polished quartz countertops and backsplashes, ceramic tile floor and shower surrounds and walk-in double showers with semi-frameless glass enclosures.

Foster said that Zetter Place will provide modern, luxurious living in a convenient location.

“We’re within walking distance of a big transit hub,” he added. “At the same time, we’ve still got a green belt location backing on to Yorkson Creek, which provides access to a huge trail network.”

For Ruggles, the move will mean a change of lifestyle and the ability to live a simpler life without having to look after a 3,300-square-foot home.

“We’re avid cyclists, so it will be great to be able to hop on our bikes, go out the back of the property and be right on the bike path,” he said. “We’re not moving in until next November, but that’s worked out to our benefit. We do have to sell this house, so it gives us a little bit of breathing room to do that at an opportune time.”

Homes at Zetter Place are priced from $419,900. Buyers will be able to move in starting early in the new year.

© 2016 Postmedia Network Inc.

Provincial program could boost townhomes

Derrick Penner
The Vancouver Sun

British Columbia’s new assistance program for first-time home buyers has the potential to bolster a segment of the property market that has stayed strong in the midst of sliding sales, according to one market observer.

“The net impact (of the program), it does draw more people into the market, into the condo and town home market,” said Bryan Yu, senior economist with Central 1 Credit Union.

However, while sales have dropped off in the market for pricier single-family homes, Yu said the more affordable condominium and town home segments of the market have remained more active.

And that additional demand could push “upside pressure on pricing,” Yu said, because the multi-family housing sector is still struggling with a lack of supply to meet demand.

Premier Christy Clark on Thursday unveiled what government is calling the B.C. Home Partnership Program; low-cost loans to first-time buyers of up to $37,500 to help fund minimum down payment requirements.

Applicants can only buy properties valued to a maximum of $750,000, however the province’s expectation is that most users will be looking for entry-level homes in the $300,000 to $400,000 range.

Yu released Central 1’s economic forecast for B.C. on the same day as the provincial announcement in which he estimated that housing sales would continue to slow in 2017 particularly on the multi-family side as recent changes to mortgage-qualification rules were expected to squeeze more first-time buyers out of the market.

“This is going to be offsetting some of the weakness that would have come from the mortgage insurance rules,” Yu said.

While the province is billing the program as help to get first-time buyers into an overheated market, NDP housing critic David Eby argued that the boost will simply give buyers on the cusp of qualifying for mortgages more ammunition to bid up property prices and put them deeper in debt, which is one concern that the mortgage changes were designed to address.

Yu added that any help with their down payments that loan applicants get will be offset a little bit by added costs. Because they are borrowing part of their down payments, they will have to pay higher premiums for mortgage insurance, and the loans will count against a buyer’s total debt-to-income ratio that a bank will use in evaluating their mortgage application.

Canada Mortgage and Housing Corp. spokeswoman Jeanette Wilkinson, in a statement, said CMHC “will be applying our usual standards” in evaluating applications for mortgage insurance under the program, which means gauging a buyer’s ability to repay all their debts, including the down-payment assistance loans.

However, Yu said forecasters won’t be able to estimate how big an impact the loan program will have on market demand until they start to see how many buyers make applications.

© 2016 Postmedia Network Inc.

Home loan program an old Socred idea with new money

Jeff Lee
The Vancouver Sun

If the provincial government’s new mortgage assistance program for first-time homebuyers sounds familiar, that’s because it is certainly not new.

For decades before the Social Credit government of Bill Vander Zalm wiped it out in the late 1980s, the province ran a B.C. Second Mortgage program that gave low- or no-interest mortgage loans to homeowners who would otherwise not meet minimum lending qualifications.

The concept, brought in by the Socred government of W.A.C. Bennett and carried on through successive New Democrat and Socred governments, created more than 50,000 second mortgages and pumped hundreds of millions of dollars into the real estate economy.

By the time Vander Zalm’s government sold it off in 1989 to the Bank of Montreal as part of a wider target of privatizing many government programs, it had a portfolio of 47,000 mortgages worth $300 million. Then-social services and housing minister Claude Richmond said at the time the “sale of these loans is part of our government’s initiative to return responsibility for this type of lending to the private sector”.

On Friday, former Premier Vander Zalm said he doesn’t believe the new program will be any more useful or effective than the old one. But on one point he complimented Premier Christy Clark, saying it clearly was a useful political ploy as she heads into a May election.

“Well, it’s always a good thing just ahead of an election in that it kind of dulls or numbs any opposition remarks that you’re not doing enough to help young people get into a home,” Vander Zalm said. “It gives you an opportunity to say ‘what a great job we’re doing. We’ve cut our foreign investment and now we’re doing this’.”

But Vander Zalm said backing mortgages with taxpayer funds, particularly for those who might otherwise not qualify, isn’t sound fiscal policy.

“Politically, it is not a bad thing. But as far as value for investment, it is not that great,” he said. “It won’t make that much of a difference. It may even, as some are suggesting, encourage people to get in when perhaps they aren’t ready for it.”

Under the new program, the province will loan up to five per cent of cost, up to $37,500 on a home worth a maximum of $750,000, as long as the buyer matches the amount. But in order to qualify, the buyer has to be pre-approved for a Canada Housing and Mortgage Corporation-insured loan. Those high-ratio loans top out at 90 per cent. The 25-year provincial mortgage would be interest free for the first five years, and would remain on the title behind the bank first mortgage. The homeowner would be required to live in and keep their home for that period.

Clark told reporters on Thursday her new B.C. Homeowner Mortgage and Equity Partnership was inspired by Bennett’s original program.

“It’s a little bit different but the essentials of it are the same. We want to be a partner in your home because we want people who are struggling right now renting to find their way into home ownership and we know it’s tough,” she said. “So I think British Columbians expect their government to be there for them and we want to be.”

The program, which comes into effect next year, was poorly reviewed by Tsur Sommerville, a professor of real estate economics at UBC’s Sauder School of Business.

“I don’t think this is a good idea and the reason I think that is that lots of people who don’t need the help are going to get it for a very small number of people who benefit from it,” he said.  “The people who most need the help are the people who can’t save enough to meet that (CMHC) clearance.”

Somerville said the program will inevitably push up housing prices because of demand, and that some applicants may end up spending themselves into houses they otherwise couldn’t afford.

“Higher prices for sure are an outcome because it is going to increase demand. There is the potential adverse effect that the more this pushes up prices the more there are people who get priced out of home ownership.”

Sommerville said there are more effective ways of assisting first-time homebuyers, including existing exemption of the property transfer tax on new homes under $750,000, and on existing homes worth less than $450,000.

© 2016 Postmedia Network Inc.

Lending could be further curbed in anticipation of a housing correction

Joanne Lee-Young
The Vancouver Sun

As federal regulators tighten mortgage rules, there are signs the big banks are moving away from the behind-the-scenes lending practices that helped their earnings in a rising real estate market but are now starting to look more risky.

Banks had not only been growing their ranks of unlicensed mortgage specialists in recent years, but also dipping into more perilous mortgage lending by making deals for higher-risk borrowers through subsidiary companies or an internal, but separate department.

“Some of them have been saying, whoa, maybe we shouldn’t be in this as much anymore,” said David Madani, a former Bank of Canada senior economist who now works for the research firm Capital Economics.

CIBC confirmed to Postmedia it is shuttering the Vancouver office of its HLC Home Loans Canada subsidiary, a process the bank says isn’t related to recent changes in mortgage rules, but that has been in the works for some time.

The wholly-owned subsidiary of CIBC employs mortgage option specialists who take on the mortgage clients that CIBC rejects because they don’t meet credit guidelines, according to a job posting with HLC’s Vancouver office. HLC specialists also refer clients to alternate lenders when they “no longer meet bank risk standards and/or are current risks for CIBC,” according to the posting.

A CIBC spokesperson told Postmedia: “We made the decision to wind down the HLC business two years ago as part of our broader strategy to deepen our client relationships, and the majority of the employees are now CIBC mortgage advisers.”

At Royal Bank, when a potential borrower’s application for a mortgage doesn’t pass muster, a bank representative passes the file along to what is known, uniquely at RBC, as the “alternate mortgage solutions” or AMS team. This group then farms out the deal to other alternate lenders, much like a licensed mortgage broker might, and when the mortgage closes the bank representative is paid. The bank did not respond to a Postmedia request asking for details such as the current size of the AMS team and if there have been any recent reductions, as some industry sources suggest.

A retreat from these lending practices comes as there are questions about the health of the big six national banks’ mortgage books, which swelled five per cent to $1.14 trillion in 2016, according to James Shanahan, a senior analyst who focuses on Canadian banks at Edward Jones. More than two-thirds of the $52.8 billion in new mortgages are uninsured, triggering fears of a crash. 

“It’s true, you can say that Canadian banks are very conservative, but they have been, I would say, aggressive in extending mortgages to homebuyers,” said Madani. “It’s a concern because if we get into a nasty housing correction and prices of homes drop, some people will be defaulting on their obligations and this will then present a problem to the banks.”

Bank mortgage specialists differ from mortgage brokers. Rather than representing the borrower and shopping around for the best mortgage rate, specialists work to bring in new business to the banks. They work solely on commission and sometimes without a desk at the bank. They also aren’t subject to the regulations of B.C.’s Financial Institutions Commission, which oversees the province’s 3,400 registered mortgage brokers.

Although consumers are increasingly turning to mortgage brokers, 47 per cent of homebuyers still went to a mortgage representative at a Canadian bank to make a purchase in 2016. Also, 67 per cent of homeowners go to banks to renew or refinance a mortgage, according to a recent Mortgage Professionals Canada study. When you look at all mortgage holders, 56 per cent worked with a bank representative. For the banks, the use of mortgage specialists and alternate lending teams is a way not only to make a fee, but also to “hold onto that client,” said Geoff Lee, a Vancouver-based mortgage broker.

The concern for consumers, according to Samantha Gale, CEO of the Mortgage Brokers Association of B.C., is that borrowers might not realize their file has been shifted from the bank to an outside lender without first being shopped around for the best rate. The details would be in the very fine print.

Not everyone agrees that such a borrower would necessarily be in the dark. “We actually call and talk to them so they know who they are working with,” said Jonathon Cowan, president of Peat & Cowan Financial, a Vancouver-based broking firm that has a contract to work with borrowers turned away from Toronto-Dominion Bank.

Gale counters with an example of what could happen to an unsuspecting consumer: “You could have someone requesting financing who gets turned down by the bank itself and then referred (by the bank) to their alternative lending (subsidiary or department), but who could have actually qualified for the loan elsewhere on different terms.”

HLC is not the first CIBC mortgage business to be shuttered. In 2012 the bank closed FirstLine whose loans, often granted to the self-employed and recent immigrants, were described as having “some similarities to non-prime loans in the U.S. retail lending market,” according to a Bloomberg News story citing a report from the Office of the Superintendent of Financial Institutions, which governs Canadian banks.

The report added that the banks and other lenders are becoming “increasingly liberal” with mortgages and home equity lines that don’t mandate borrowers to prove income.

CIBC executives said in a recent earnings call that most of the bank’s uninsured residential mortgage loans have high credit scores and less risky, low loan-to-value ratios.

Of all the big banks, CIBC’s portfolio of uninsured mortgages grew the most, by 32 per cent or $25.4 billion, in 2016, according to Shanahan. 

In a recent quarterly outlook note, Madani spelled out what a housing correction might mean for consumers: “We doubt any large banks would ever become insolvent, but the fallout would likely force them to curb lending.”

© 2016 Postmedia Network Inc.

Justin da Rosa
Canadian Real Estate Wealth

Real estate association tries to find the positive in a downward trending market.

“BC home sales trend toward ten-year average,” the British Columbia Real Estate Association proclaimed in its latest sales report.

 “Moderating consumer demand in the province’s largest population centres continues to trend home sales toward the ten-year average,” Cameron Muir, BCREA Chief Economist, said. “The seasonally adjusted annual rate of MLS® residential sales was approximately 89,000 units last month.

The ten-year average is 83,000 unit sales, while the 15-year average is 85,300 unit sales.”

But is that the big story?

For investors with interests in the province, not likely.

Sales were down 20.1% year-over-year in November, coming in at 6,419 total residential sales.

Prices also took a dip, falling 6.4% year-over-year to $625,871.

Vancouver, specifically, had a tough month. Unit sales fell 37.4% to 2,225 and the average price dropped 3.8% to $895,084.

According to the Canadian Real Estate Association, Vancouver is no longer a seller’s market

“A sales-to-new listings ratio between 40 and 60 percent is generally consistent with balanced housing market conditions, with readings below and above this range indicating buyers’ and sellers’ markets respectively,” CREA said in its monthly stats release. “The ratio was above 60 percent in almost half of all local housing markets in November, the vast majority of which are located in British Columbia, in and around the Greater Toronto Area and across Southwestern Ontario.

“In Greater Vancouver, the ratio has moved out of sellers’ market territory and into the mid-50 percent range.”

Still, it’s not all bad news.

“Year-to-date, BC residential sales dollar volume increased 22.8 per cent to $74.5 billion, when compared with the same period in 2015,” BCREA said, again focusing on the positive. “Residential unit sales climbed by 12.1 per cent to 107,488 units, while the average MLS residential price was up 9.6 per cent to $692,745.”

Copyright © 2016 Key Media Pty Ltd

Ephraim Vecina
Canadian Real Estate Wealth

Any move by the U.S. Federal Reserve will have a noticeable impact on the Canadian financial system—and this is especially true for any fluctuation in the Fed’s rates.
 
“Interest rates are rising in the United States and there will be a spillover here,” markets observer Rob Carrick wrote in his December 14 column for The Globe and Mail. “The Fed also estimates three rate increases next year, up from previous guidance that called for two increases. This sets a trend for rising rates that could easily boost Canadian mortgage costs.”
 
Carrick argued that some adjustments to spending habits would be prudent in light of this possibility.
 
“Think of your finances as a zero-sum proposition – if more money goes to your mortgage, it has to come from somewhere. Start planning now so you have a strategy in place if you have to renew a fixed-rate mortgage at a higher rate.”
 
Concerned home owners should keep a closer eye on the bond market through the Bank of Canada’s website, Carrick said.
 
“Mortgage rates are guided mostly by the interest rate on bonds. The rate on the five-year Government of Canada bond has doubled since the summer, a huge move by bond-market standards,” he explained. “Some lenders have already increased rates on five-year fixed-rate mortgages, far and away the top choice of mortgage holders today.”
 
The analyst urged those who are nearing renewal time to take advantage of the current environment while it lasts.
 
“If you’re renewing a mortgage in the next six months, talk to your lender about how to speed up the process so you can capitalize on current rates. People in the market to buy a house should lock in a rate right now – up to 120 days might be possible. Or consider taking a breather on your house search to see if rising rates have an effect on prices.”
 
“Economists have been saying for ages that only two things can shake the housing market – higher rates or an economic shock that sends the unemployment rate higher. The housing market has its tipping point and any rate increases ahead bring us closer to it,” Carrick concluded.

Copyright © 2016 Key Media Pty Ltd

Ephraim Vecina
REP

In a study released earlier this week, Canada’s budget overseer warned that the country’s cooling real estate sector will lead to a drastic drop in the number of new homes—which in turn will trigger a slowdown in residential investment that would hamper economic growth from 2018 to 2020.
 
The Parliamentary Budget Officer said in its Tuesday (December 12) report that this development is a culmination of a trend that started in 2012, in which demand gradually outstripped supply.
 
Approximately 198,900 homes will be completed in 2017, representing the peak of new housing construction. A rapid descent soon thereafter will bring this down to an average of around 170,900 units between 2019 and 2021, the Financial Post reported.
 
The budget officer also predicted that housing will still manage to slightly boost national GDP in 2017 before beginning to drag down the economy by 0.2 per cent in 2018, 0.4 per cent in 2019, and 0.1 per cent in 2020.
 
Real estate has long played a role in boosting Canada’s economy, but the recently introduced changes to federal rules governing mortgages will play a major role in diminishing demand for the country’s residential properties.
 
While this is not yet apparent in Toronto (where housing sales numbers have reached record heights last month), Vancouver—which has seen some slowdown already due to B.C.’s 15 per cent property transfer tax on foreign buyers—has suffered a dramatic 37 per cent year-over-year decline in home sales in November.

Copyright © 2016 Key Media Pty Ltd

REP

It was a welcome announcement from the BC government, but it has its critics

“It’s great that the BC Government is helping first-time homebuyers but I am wondering what this program is doing to address the increasing house prices. If this program enables even more people to get into the market, will that not just increase demand?” one commenter wrote in the REP forum. “Won’t an increase in demand with no corresponding increase in supply just drive home prices up even further? When are programs going to be put into place to address the supply issue?”

The BC Government has announced today the BC Home Owner Mortgage and Equity Partnership Program.

Under the program, the BC government will match down payment funds of eligible first-time homebuyers up to $37,500 with a 25-year term second mortgage.

As an example, a buyer purchasing a $500,000 home can put down 5% using $12,500 of their own funds and $12,500 from the BC Home Partnership Program.

No payments are required and no interest will accrue until the sixth year of the mortgage term.

Many have already commended the government for taking action and helping first-time buyers over the initial hurdle of homeownership.

“People need a partner in scraping together that first down payment,” Premier Christy Clark, who announced the program, told a news conference Thursday.

“A home is a place where you live and raise your family and start your life,” she said of the three-year program that starts next month.

The program will be paid for in part by a 15-per-cent foreign homebuyers’ tax and a luxury tax on homes priced at over $2 million, Clark said.

New Democrat David Eby, the Opposition’s housing critic, said the plan will saddle first-time homebuyers with more debt when the government should be building affordable housing on provincial land.

Eby said the government’s move appears to reward real estate developers who are major financial contributors to B.C.’s Liberal party.

“We really think the government should be looking at protecting the interests of first-time homebuyers so they don’t have to take on so much debt to get into the housing market because they are already swimming in debt,” he said. “It’s bizarre to me they are going the other way and the only explanation I can think of is they want to reward their donors.”

To be eligible, first-time buyers must be pre-approved for an insured high-ratio mortgage for at least 80 per cent of the home’s purchase price.

The government provided an example of the loan program on a $750,000 home where the buyer has saved $52,500 for a down payment.

Copyright © 2016 Key Media Pty Ltd

Steve Randall
REP

The announcement from the BC government that it will help first-time buyers with a new tax-free loan program has been welcomed by many but not everyone agrees that it is the right move.

The scheme will enable eligible buyers to receive funding from Victoria for the greater of up to 5 per cent of their new home’s purchase or $37,500, to match their own downpayment savings.

“The introduction of this program will address the affordability gaps that, as a REALTOR®, I hear about every day,” says BC Real Estate Association President Deanna Horn. “We thank Premier Clark and Minister Coleman for introducing this valuable program to assist first time home buyers in entering the marketplace.”

However, economist Tom Davidoff of the University of B.C.’s Sauder School of Business, slammed the idea, saying that supply is the issue that needs to be addressed.

“I hate it. To be very clear, I think it’s really bad economics,” Davidoff told the Vancouver Sun.

Copyright © 2016 Key Media Pty Ltd

Rob Shaw, Jennifer Saltman
The Vancouver Sun

First-time homebuyers struggling to cobble together a down payment for a home could soon get an interest-free loan from the B.C. government, a move some experts say undermines Ottawa’s attempts to curtail risky mortgages to overstretched buyers.

Premier Christy Clark announced Thursday that a new provincially backed loan program would match the amount a first-time buyer has saved for a down payment — up to $37,500, or five per cent of the home’s purchase price.

Clark painted the move as an attempt to help middle-class British Columbians overcome the hurdle of saving for expensive down payments. Not everyone has a parent they can borrow money from to get into the housing market, and some need government’s help, she said.

But down-payment requirements, set by Ottawa to curb risky lending, exist to weed out buyers who might overextend themselves on properties they can’t afford if interest rates increase. 

“I hate it. To be very clear, I think it’s really bad economics,” said Tom Davidoff of the University of B.C.’s Sauder School of Business. 

“Big picture, it’s a step in the wrong direction. We have too much demand chasing too little supply.”

Davidoff said the move could be an attempt by government to prop up a real estate market that is at risk of a sharp decline in 2017.

The new loan program was greeted with praise by developers, the real estate industry, mortgage brokers and some housing analysts who argued it will help those who would already qualify for mortgages speed their entry into the market.

Premier Christy Clark announces a new program in Surrey to assist first-time homebuyers across the province on Thursday. RICHARD LAM / PNG

“What we know is for many first-time homebuyers, qualifying for a mortgage is hard, but getting past that down payment and scraping together the $25,000 or $50,000 you might need to be able to get into your first home is just impossible,” said Clark.

“So we want to be there to help first-time homebuyers get over that hump.”

The new loans — called the B.C. Home Owner Mortgage and Equity Partnership program — would be granted to Canadian citizens or permanent residents who have never previously owned a property and only apply to homes worth less than $750,000. A buyer must be able to pre-qualify for a mortgage and have a gross household income of less than $150,000. Applications open Jan. 16, and the program ends March 31, 2020.

The government would put a second mortgage on a property to reflect the amount it loaned, but not require any interest payments or payments on the principal for the first five years. After that, the 20-year repayment plan would be set at the prime lending rate plus 0.5 per cent, leaving the homeowner to pay back both the original mortgage and the down-payment loan at the same time.

Tom Davidoff, UBC School of Business: ‘Big picture, it’s a step in the wrong direction. We have too much demand chasing too little supply.’ Ian Lindsay / PNG Files

The loans are available for condos, townhouses or detached homes. On a property worth $600,000, the government loan could help a buyer meet or exceed the federally-set minimum down payment of $35,000. In one example, provided by B.C. Housing, a person who saved $30,000 could apply to get an additional $30,000 from the province, giving the buyer a $60,000 down payment.

“The fact is it does help first-time homebuyers and relieves the pressure on the bank of mom and dad,” said Neil Moody, CEO of the Canadian Home Builders Association of B.C.

“It keeps the housing continuum moving along. We need these first-time homebuyers. Anything that can be done to help them get into the market at that stage is a positive thing.”

Jill Oudil, president-elect of the Real Estate Board of Greater Vancouver, said the program will help first-time buyers overcome a “key obstacle” to home ownership.

Realtors work all the time with young families that can afford the mortgage payments, but not the thousands required for a down payment, she said.

“The great part about the program is it will really help give them incentive to save for the down payment that might have seemed unattainable,” said Oudil.

© 2016 Postmedia Network Inc.