Measures in the recently tabled federal budget such as 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 rate 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 “crackdown” 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.

Advocates weigh in on housing affordability in Canada

Advocates say while the federal government’s focus on housing affordability in the budget is promising, its measures could go further to help people in the direst need of housing.

Emilie Coyle, executive director of the Canadian Association of Elizabeth Fry Societies, says women and gender diverse people experience chronic homelessness in a way that falls outside the definitions used by housing programs.

“We may be in precarious housing situations where they’re experiencing domestic violence, for example. They would like to leave but they can’t,” Coyle said. “Or some folks exchanging sexual favours so that they can find housing.”

For sale sign at home in Ontario
A new home is displayed for sale in a new housing development in Ottawa on Tuesday, July 14, 2020. THE CANADIAN PRESS/Sean Kilpatrick

The Canadian Mortgage and Housing Corporation said that 26 per cent of single female-led households are in core housing need, compared to 16 per cent for single male-led households.

Tim Richter, CEO of the Canadian Alliance to End Homelessness, says he hoped to see more action on Indigenous housing since they’re disproportionately affected.

“One of the biggest disappointments in the budget was the lack of Indigenous housing strategy. It’s probably one of the biggest gaps in Canada’s housing strategy right now,” Richter said.

Documents obtained by The Canadian Press under Access-to-Information legislation say that about five per cent of Canada’s population is Indigenous, but Indigenous people make up around 30 per cent of those who use homeless shelters.