Federal Finance Minister Bill Morneau was in Toronto on Wednesday to stand up for measures announced in yesterday’s budget, including the First-Time Home Buyer Incentive.
Morneau joked about the mostly business crowd, hosted by Toronto Region Board of Trade, Canadian Club of Toronto, and Empire Club of Canada, being much quieter than the House of Commons yesterday.
Measures to ease housing affordability for first-time buyers include CMHC chipping in up to 10 per cent of the purchase price of a home, interest-free.
Anyone lucky enough to have significant savings in an RRSP will be able to withdraw $35,0000 dollars to buy a home, up from the current $25,000.
“These measures will work,” Morneau told Yahoo Finance Canada.
Some argue the incentives will backfire because they will drive up demand and push prices higher, but Morneau disagrees.
“When you think about the overall homebuyer market we have roughly half a million home purchases a year, 100,000 of them are first-time homebuyers,” said Morneau.
“When we’re talking about maybe 20,000, maybe 30,000, maybe 40,000 thousand new families, which is really important for those families, but we’ve done the modelling to show there’s not an issue around changing demand dynamics.”
Morneau also reiterated Ottawa’s commitment to cracking down on illegal activity in the housing market.
“We are putting together teams to look at any sort of money laundering issues in the housing market,” said Morneau.
“These are important in getting at people who are actually creating the demand inappropriately.”
He also touted measures to increase supply, including affordable rentals.
Morneau says the mortgage stress test will stay in place as long as OSFI thinks it should.
“The Office of the Superintendent of Financial Institutions will continue to look at those stress tests to make sure they are appropriate and continuing to have the impact we are hoping they have,” said Morneau.
“We continue to be concerned about overall household debt This is an important issue for showing that Canadians are resilient enough to face up to any changes in the economy.”