Canadian banks are reporting a surge in interest for the newly introduced First Home Savings Account (FHSA) program. This innovative initiative empowers potential homebuyers to kickstart their homeownership journey by saving and investing for a down payment, all while enjoying tax-free benefits!
At Canadian Mortgage Professionals, we’re thrilled to keep you in the loop about this game-changing program that’s making waves in the housing market.
Feel free to contact us anytime to discover how thousands of Canadians are already taking advantage of the FHSA program to pave their way to homeownership success.
The FHSA Buzz: Early Uptake Soars
Since the FHSA program’s rules came into effect on April 1, Canadian banks have been witnessing a remarkable surge in interest. Notably, the Royal Bank of Canada (RBC) recently shared that “tens of thousands” of accounts have been opened across the country. This significant interest is part
icularly pronounced among younger Canadians, who are keenly embracing this opportunity to start building a tax-free down payment fund for their first home.
Flora Do, Vice-President of Investments Transformation and Client Segments at RBC, expressed excitement about the FHSA program’s early success. She highlighted, “Since our April launch, tens of thousands of FHSAs have been opened by Canadians — phenomenal early uptake of this innovative way to save and invest for a first home.”
Who’s Benefitting Most?
Statistics from RBC indicate that the FHSA program is resonating strongly with the younger demographic. Clients aged 25 to 34 make up the largest proportion of FHSA holders at 56%, followed by clients aged 35 to 44 at 20%, clients between 18 and 24 at 18%, and clients aged 45 and older at 6%.
Investment Trends: ETFs and Stocks Shine
The FHSA program offers flexibility in investment choices, and RBC clients are making the most of it. Exchange-traded funds (ETFs) and stocks are the most common investment avenues chosen by FHSA holders, offering a dynamic approach to growing their savings and investments.
Key Highlights of the FHSA Program:
Saving Window: FHSA account holders can save for up to 15 years, ensuring a comprehensive approach to building a solid down payment foundation.
Annual Deposit Cap: The program offers an annual deposit cap of $8,000, starting from the year the account is opened, with a lifetime contribution limit of $40,000.
Tax Deductions: Similar to a Registered Retirement Savings Plan (RRSP), deposits can be claimed as deductions against taxable income.
Tax-Free Growth and Withdrawals: Investments in the account can grow and be withdrawn tax-free if used for a down payment, mirroring the benefits of a Tax-Free Savings Account (TFSA).
Unused Contribution Flexibility: Unused portions of the annual contribution limit can be carried forward to the following year, up to $8,000. Additionally, any unused savings can be transferred tax-free into an RRSP or Registered Retirement Income Fund.
Embark on Your Homeownership Journey with Confidence!
At Canadian Mortgage Professionals we understand that the journey to homeownership is an exciting yet complex one.
With the FHSA program gaining momentum, now is the perfect time to take control of your financial future. Our expert mortgage team is here to guide you through the intricacies of the FHSA program and help guide you to make informed decisions that will ultimately achieve your homeownership dreams.
Contact us today to learn how the FHSA can be a powerful tool on your path to owning your first home!