Measures in the recently tabled federal budget will help Canadians weather higher interest rates, Prime Minister Justin Trudeau said Wednesday, as he acknowledged there are no easy solutions to the country's housing affordability crisis.
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 increase the cost of bank loans, including variable-rate mortgages.
As well as a tax-free savings account that can be used for the purchase of a first house, 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.
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.
At a separate event on Wednesday, in Surrey, B.C., Freeland said her government's decision in 2016 to raise the requirements to obtain mortgages is paying off now that the central bank's key interest rate is rising. The 2016 so-called "stress test" ensured borrowers could afford to repay loans if interest rates increased.
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