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Economists in Canada have sounded the alarm on household debt growth for a number of years now. Statistics Canada released data last week that showed the ratio of household credit market debt to disposable income rose from 165.2 per cent in the first quarter to 167.6 per cent in Q2.

Household debt has rapidly risen as housing prices have continually hit new record levels in Canada and homebuyers take out increasingly larger mortgages — as incomes remain stagnant. Toronto and Vancouver have been singled out by the Bank of Canada as two markets where this is a particular concern, as the average single detached home now sells for more than $1 million in both cities.

The BIS said that given low interest rates, countries with high debt loads such as Canada are unlikely to see any stress emerge. And its indicator is not a guarantee that stress will emerge in the future.

But the global banking body again singled out Canada as one country where trouble could emerge if interest rates move higher.

“Estimated debt service ratios, which attempt to capture principal and interest payments relative to income, appear to be at manageable levels at current interest rates for most countries, although they point to potential concerns in Brazil, Canada, China and Turkey,” the BIS wrote in its report.