Measures in the recently tabled federal budget such as a tax-free savings account for first-time homebuyers will help Canadians weather the Bank of Canada’s new interest rate hike, Prime Minister Justin Trudeau said Wednesday.
Earlier in the day, the Bank of Canada raised its key interest rate by half a percentage point to one per cent — its highest rate hike in more than 20 years — which is expected to affect the cost of bank loans, including variable-rate mortgages.
“In the budget we put forward a plan to address the housing crisis that too many families are living through,” Trudeau told reporters in a suburb north of Montreal, responding to a question about the interest rake hike.
Other than the tax-free savings account, he said the budget for the 2022-23 fiscal year includes measures to double housing construction starts across the country and to “crack down” on speculation, including by limiting market access of foreign buyers.
“We know that there isn’t any one thing any government can do,” he said about the high cost of living in Canada. “Every family is a different situation, and the approach we take has to be multi-faceted.”
The prime minister also responded to accusations by federal Tory leadership candidate Pierre Poilievre, who has said municipalities across Canada are helping to keep housing prices high by causing construction delays and adding costs. Poilievre wants the federal government to pressure cities to reduce bureaucracy and lower the costs involved in building homes.
Trudeau said his government is investing billions of dollars and partnering with cities to accelerate housing starts, “instead of talking about it, as some Conservatives are doing.”
“It’s good to see other parties agreeing with us that that’s the best path forward,” he added.
This report by The Canadian Press was first published April 13, 2022.