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VANCOUVER — A new interest-free loan program touted by the British Columbia government as a boon to first-time homebuyers who are struggling to save for a down payment is drawing harsh criticism from economists and other experts who pan the proposal as a politically motivated move that is likely to inflate housing prices even further.

The program could end up boosting demand — and therefore prices — by encouraging even more people to compete over the same number of homes, said Joshua Gottlieb of the Vancouver School of Economics.

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“It seems like a policy that does not reflect an understanding of the current markets or basic economics,” he said in an interview.

“This is actually not really promoting ownership. This is promoting owning a small share of a home and taking a big risk with other people’s money.”

The provincewide program provides a matching loan that is interest-free and payment-free for the first five years to residents buying their first home, capped at five per cent of a property’s purchase price to a maximum of $750,000. That means the government could contribute up to $37,500 for each eligible home purchase.