Exploring Toronto's Innovative Down Payment Assistance for 2024

For those of you aiming to step into the Toronto real estate market, or indeed anywhere in Canada, there's a significant update you might find beneficial. The city of Toronto is contemplating an expansion of its down payment assistance program, which could soon include residents earning up to $160,000 annually, placing them in the 80th percentile of earnings. This initiative aims to broaden the definition of "attainable" housing, making homeownership a reality for a larger segment of the population.

What's New in Toronto's Assistance Program?

Eligibility Expansion: Previously, assistance was capped for those in lower income brackets, but the new proposal considers aiding families earning up to $160,000, acknowledging the city's high cost of living.

Partnerships for Affordability: The program might involve non-profits like Habitat for Humanity, who could partner with private developers to offer affordable housing options. This could lead to more units available under this assistance.

Fee Waivers: The city might waive certain fees, which non-profits could then pass on as down payment assistance loans to buyers. This initiative stems from a broader provincial mandate requiring cities to support such efforts.

Beyond Toronto - Federal and Provincial Programs

First-Time Home Buyers' Tax Credit (HBTC): Offers a non-refundable tax credit to first-time buyers, potentially saving up to $750 on closing costs.

GST/HST New Housing Rebate:For those building or substantially renovating a home valued under $450,000, this program could offer significant tax rebates.

Shared Equity Mortgages: Programs like those from Ourboro or through federal initiatives allow for shared equity.

Things to Consider: While shared equity programs make homeownership more accessible, it’s important to consider the following:

1. Equity Sharing: Buyers give up a portion of future home equity, which can reduce profits when selling the property.
2. Home Value Changes: If the home's value increases, the amount owed to the shared equity partner will also increase. If it decreases, the shared equity partner shares in the loss.
3. Eligibility Criteria: Most programs are geared toward first-time buyers or those within specific income brackets.

These programs provide valuable options for Canadians looking to break into the housing market, particularly in high-cost areas. Consulting with a mortgage specialist or real estate professional can help identify which programs best suit your needs.

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MORTGAGE NEWS!

Anticipated Bank of Canada Rate Cut and Its Implications

Canada's unemployment rate rose to 6.8% in November 2024, marking the highest level in nearly eight years, excluding the pandemic period. This increase, up 0.3 percentage points from October, was higher than anticipated and is attributed to a significant influx of individuals entering the labor force. Despite the addition of 50,500 jobs, the rapid population growth led to more people actively seeking employment, outpacing job creation.

Reuters

In response to the unexpected rise in unemployment, financial institutions like BMO and Oxford Economics have adjusted their forecasts, now anticipating a 50-basis-point cut in the Bank of Canada's policy rate during its December 11 meeting. Bond markets reflect this sentiment, pricing in a 75% probability of such a reduction, which would lower the policy rate to 3.25%, the lowest since September 2022. This move aims to stimulate economic activity by reducing borrowing costs for consumers and businesses.

Reuters

However, some analysts advocate for a more cautious approach. Desjardins, for instance, maintains its expectation of a 25-basis-point cut, arguing that the rise in unemployment masks underlying economic strength, as evidenced by substantial job creation and controlled inflation. They suggest that a moderate reduction would balance the need to support the economy without overstimulating it.

What do you think? Will the Bank of Canada cut .25 or .50 on the current interest rate?

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