Bloated debts and rising interest rates threaten to force a growing number of families to cut back and prompt Ottawa to intervene again to cool down the mortgage market.

Canadians have spent the past year rushing into a housing market fuelled by low mortgage rates, despite prices many could not afford if rates were to rise to more historically normal levels. About 375,000 homeowners are already being forced to cut spending in other areas, despite ultra low rates, the Canadian Association of Mortgage Professionals said in a recent report. A further 475,000 would find themselves in the same position if rates were to climb to 5.25 per cent.

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