RBC Reports: Canadians Embrace New First Home Savings Account in Large Numbers

The Royal Bank of Canada (RBC) recently announced a remarkable surge in popularity for its First Home Savings Account (FHSA) program.

The Royal Bank of Canada (RBC) recently announced a remarkable surge in popularity for its First Home Savings Account (FHSA) program. Designed to assist prospective homebuyers in saving for a down payment, the FHSA offers tax-free savings and investment opportunities. Since the program's inception on April 1, a significant number of Canadians have opened "tens of thousands" of accounts, signaling a remarkable early uptake.

While the exact number of accounts opened this year remains undisclosed, RBC reports that 26% of FHSA holders have already contributed the maximum annual amount of $8,000. Furthermore, a similar percentage of account holders are making regular pre-authorized contributions, highlighting their commitment to achieving their homeownership goals. RBC also reveals that the majority of FHSA holders, accounting for 56%, fall within the 25-34 age range. This is followed by 20% of account holders aged 35-44, 18% between 18 and 24, and 6% aged 45 and older.

The FHSA grants individuals the opportunity to save for up to 15 years, with an annual maximum deposit limit of $8,000 from the account's opening year. The lifetime contribution limit for the FHSA stands at $40,000. Similar to a Registered Retirement Savings Plan (RRSP), deposits made into the FHSA can be claimed as deductions against taxable income. The account also allows investments to grow tax-free, similar to a Tax-Free Savings Account (TFSA), as long as they are eventually used towards a down payment.

Notably, any unused portion of the annual contribution limit can be carried forward to the following year, up to a maximum of $8,000. Additionally, any unused savings can be transferred tax-free into an RRSP or Registered Retirement Income Fund, providing individuals with flexibility in managing their financial resources.

The FHSA program has emerged as a favored option among Canadians due to its unique combination of tax advantages, long-term savings potential, and flexibility in investment options. One popular investment choice for FHSA holders is exchange-traded funds (ETFs), followed closely by stocks.

The surge in popularity for the FHSA program highlights the importance Canadians place on homeownership and their commitment to diligently save for a down payment. RBC recognizes this trend and aims to provide individuals with the tools and resources necessary to achieve their homeownership dreams. The FHSA program aligns with RBC's commitment to helping Canadians navigate the path to homeownership and provides an avenue for them to make their dreams a reality.

The Royal Bank of Canada's First Home Savings Account (FHSA) has experienced substantial early uptake since its launch in April. With tens of thousands of Canadians opening accounts, the program's popularity is undeniable. By offering tax advantages, long-term savings potential, and a range of investment options, the FHSA is empowering individuals to save for their dream home. RBC's commitment to providing comprehensive financial solutions and its focus on the unique needs of Canadians have made the FHSA an appealing choice for homebuyers across the country.