Household finance, credit and house prices
As with their expectations for wage growth, consumers’ expectations for growth of household income went up slightly in the first quarter of 2020, remaining below the peak observed in the first half of 2018 (Chart 5). Expectations for spending growth edged up and continued to surpass expectations for income growth, suggesting that consumers may reduce saving or take on more debt. These expectations offer little evidence that consumers, in aggregate, were becoming more cautious in their spending. Consumers’ expectations for interest rates in two and five years from now increased, with a greater increase in rates two years from now (Chart 6). This increase likely reflects the fact that interest rate expectations were collected between January 29 and February 19, 2020, before concerns about COVID‑19 became prevalent. Consumers’ expectations for the rate of growth in house prices edged up in the first quarter in Canada overall (Chart 7). These expectations increased in Ontario, although they stayed below the highs reached in 2018. Expected growth in house prices also went up in Quebec, but it stabilized in British Columbia and remained weak in Alberta and Saskatchewan.