Where Have all the First-Time Buyers Gone?

30 August 2018
first-time buyers

We keep focusing on the biggest challenge with our current real estate market: a lack of first time buyers.

Yes, Toronto prices are higher than many parts of the country – but so are incomes of young professionals living downtown. When you ask these people to qualify for a mortgage at the ‘posted’ rate, that is the average 5 year fixed lending rate of the big banks, you decrease what these first-time buyers can purchase by about $100,000. The problem is that no one gets a mortgage at these rates. They get a five year fixed rate mortgage at 2% lower. Most potential buyers qualify at $300,000 to $400,000 and you cannot buy anything at that price. Qualify at $400,000 to $500,000 and you can get started on the property ladder.

Why is the Government so worried that people will get in over their heads and their property can be under water with just 5% down? Did you know that after 5 years, an owner with 5% down will have 20% equity in their property from paying their mortgage each month? Even if the property never increases by one dollar over five years.

What happens if you buy a car with a loan, like everyone does? When you drive it off the lot, you will be under water immediately and the Government doesn’t care!

We need to make this issue more top of mind with our politicians.

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