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Canadians' household debt levels are already at near-record levels. The Bank of Canada thinks they will swell even higher.

"Household spending is expected to remain high relative to GDP as households add to their debt burden, which remains the biggest domestic risk," the central bank said Tuesday as it boosted its economic growth forecast and indicated higher interest rates are on the way.

The central bank has issued repeated – and urgent – warnings about household debt levels in recent months.

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Canada's debt-to-income ratio was 151 per cent at the end of last year. Both the Bank of Canada and Toronto-Dominion Bank chief economist Craig Alexander see it veering to 160 per cent – a similar level to that of the United States just before the financial crisis.

Low borrowing costs and rising house prices are all fueling higher debt levels as real wage growth remains sluggish.

Much of the concern has stemmed from Canada's housing market, where prices in some markets are galloping higher. In Toronto, prices are 10.5-per-cent higher than a year ago, while in Saskatoon they are 10.1-per-cent higher, according to CREA stats released Monday.

A hot housing market prompted a warning from IMF officials on Tuesday. It boosted its forecast for Canadian economic growth, but said the housing market is "an area of potential vulnerability, with high house prices and rising household indebtedness."

But some economists think concerns over debt levels may be exaggerated.

Non-mortgage debt, or consumer credit, has clearly decelerated over the past year, notes Avery Shenfeld, chief economist at CIBC World Markets, "suggesting at least on that front, consumers are getting more cautious about growing the pile."

And while mortgage debt is still growing, a lot of that is due to higher home prices – which are now decelerating (average prices in Canada are up 1.3 per cent). "We may find that the appetite for further debt-financed activity in the household sector isn't as strong as the Bank of Canada is now assuming."

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Given that the pace of debt accumulation is already slowing, the risk is that a Bank of Canada interest rate hike – on top of fiscal austerity and tighter mortgage rules – could pour too much cold water on the economy and strain households, said Derek Holt, economist at Scotia Capital.

He doesn't put too much store in the debt-to-income ratio ("the single worst measure of household finances out there"), but instead, uses debt-to-assets ratios to gauge the true picture of household balance sheets. That measures show Canada is still far less tapped out than the U.S. was pre-recession.

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