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“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.

Photo by 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.