Housing is where the Liberal government will stake its reputation for helping with affordability
Watch: Columnist Rob Carrick explains the proposed tax-free savings account for first-time home buyers and other budget measures designed to make life more affordable for Canadians.Inflation today is caused by low interest rates, tangled global supply chains, disruptions related to war in Ukraine and the many households eager to spend money after two years of pandemic lockdowns., but it has to act like it can.
This new account is an answer to the practical question of what savings and investing vehicle is best for people getting a down payment together – TFSA or RRSP? Once the FHSA is introduced next year, it will make sense to use it first and then, once you contribute the maximum $40,000, move on to a TFSA.
There is now a race on to see which financial firms are first to introduce first-time home accounts and what investment options they offer. Stocks are all the rage these days, but they’re a treacherous way to build a down payment for a house you plan to buy within five years. A high-rate savings account would be a safer option, but alternative banks have so far been slow to reflect rising interest rates in the returns they offer.
A housing affordability measure introduced previously, the First-Time Home Buyer Incentive has been a bit of a dud, with take-up below expectations. Budget 2022 proposes to extend the incentive until March 31, 2025, and make it more appealing to use.
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