Canadian household spending is expected to decline significantly over the next several quarters as the steady beat of higher interest rates affects the purchases of homes and other big-ticket items.
that it sees borrowing costs for homes rising sharply since the central bank began hiking interest rates in March. The central bank said that households renewing an existing mortgage are facing a larger increase than they have experienced over the past 30 years.
That kind of residential investment is expected to continue to weaken through the first half of 2023, although to a lesser degree than it has over 2022. Home prices -- which have fallen by less than 10 per cent since March -- are also projected to decline further, notably in markets that saw large increases during the pandemic.
The Bank of Canada also highlighted how spending on big-ticket items like automobiles, furniture and appliances are already showing signs of slowing down, while demand for services such as travel, hotels, meals at restaurants and communication services will also be impacted.