First home savings account getting 'phenomenal' uptake since April launch: RBC

financialpost.com:

There’s been a lot of interest in opening a first home savings account (FHSA) among Canadians since the federal government introduced the registered plan in April, banks say, with tens of thousands of accounts already opened in just a few months.

The new tax-free account has been particularly popular among younger Canadians said Royal Bank of Canada, one of the banks that currently offer the service, in a press release.

The FHSA allows prospective first-time homebuyers to save for their first home tax-free, with a common contribution limit of $8,000 annually and a lifetime total of $40,000.

“Since our April launch, tens of thousands of RBC FHSAs have been opened by Canadians — phenomenal early uptake of this innovative way to save and invest for a first home,” Flora Do, vice-president of RBC’s investments transformation and client segments, said.

RBC said more than a quarter of FHSA holders with the bank have already contributed all or most of the $8,000 maximum annual amount and the same percentage are contributing regularly using pre-authorized contributions.

Ali Fares, vice-president of investment strategies at National Bank of Canada, which was the first Canadian bank to launch an FHSA on April 17, said the number of clients that first opened an account with them was above the bank’s expectations.

The majority of National Bank’s FHSA clients are funding their accounts to the maximum allocated $8,000 as well, Fares said, which was also “above expectations.”

“There’s a large number of clients who want to purchase homes this year and that’s why they’re looking for institutions who are offering it right away to get the advantage of that $8,000,” he said.

So far, RBC and National Bank are the only two major Canadian banks