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FHSA's first year successful, but more awareness needed

More than half a million Canadians embraced the First-Home Savings Account (FHSA) within its inaugural year, a significant milestone indicating widespread interest in homeownership assistance. Nonetheless, financial experts believe that with a stronger awareness campaign, even more individuals could reap the benefits of this program.

Launched on April 1, 2023, the FHSA presents a unique opportunity for prospective homeowners who haven't owned a property in the preceding four calendar years to save towards a down payment. The scheme permits annual contributions of up to $8,000, accumulating to a maximum of $40,000. Similar to a Registered Retirement Savings Plan (RRSP), contributions are tax-deductible, while interest earned remains tax-exempt, aligning with the framework of a Tax-Free Savings Account (TFSA).

Certified financial planner Cindy Marques, of Open Access Ltd., lauds the program's initial success and underscores its role in incentivizing Canadian savings for homeownership. Marques, reflecting on client feedback, expresses optimism about the FHSA's impact.

Finance Minister Chrystia Freeland heralded the achievement, noting that over half a million Canadians have taken strides toward homeownership through the FHSA. However, despite this notable uptake, Marques suggests that a lack of awareness regarding eligibility and benefits may hinder broader participation.

Marques identifies misconceptions surrounding the term "first home," which may deter individuals who've previously owned property. Clarifying that eligibility extends to those without homeownership in the past four years, she underscores the potential for wider engagement with improved understanding.

Questrade, the pioneering financial institution to offer FHSAs, witnessed unprecedented demand since the program's inception. Rob Galaski, Questrade's chief journey officer, highlights the enthusiasm among young Canadians for FHSA utilization, evident in the tens of thousands who've opened accounts. Galaski underscores the pent-up demand observed, with an average contribution of $5,300 within 90 days, reflecting the account's perceived value.

While major banks, including the National Bank of Canada and Royal Bank of Canada, have joined the FHSA initiative, Marques proposes enhancements to further optimize the program. She advocates for unlimited rollover of unused contribution room, currently capped at $8,000 annually. Marques emphasizes the importance of flexibility, especially during periods of financial constraint, to ensure maximum utilization of the FHSA's benefits.

In conclusion, while celebrating the FHSA's successful debut year, stakeholders recognize the imperative of enhanced awareness and program refinements to maximize its potential impact. As Canadians aspire towards homeownership, initiatives like the FHSA stand as vital tools in facilitating this cherished dream.



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