Canada’s household debt to income rose in Q1 from 150.6 to 152 and Canada’s c.bank warned that such debt levels pose serious danger to financial stability noting that the debt levels are higher then US or UK, themselves marred in real estate deleveraging.

“Of main concern to the Bank of Canada is household debt. It rose by 0.9 percent in the first quarter, almost all from mortgages, compared with a 1.3 percent rise in the fourth quarter of 2011 and a 1.8 percent increase in the second,” reports Reuters.

Banks are saying that debt to income statistic is insignificant because debt to “net worth” is stable.

“This growth in borrowing is not because any of us have massively relaxed our standards and started lending to people who can’t afford it,” said Richard Goyder, vice president of personal lending at RBC.

Goyder then noted that debt to net worth is stable, “actually declining slightly”.

Of course, much of that stable Canadian “net worth” is predicated on the price of shacks like the one in the photo to keep selling for $1.3 million, but let’s remember that even the more beautiful tulips eventually hit their price ceiling.

According to the Statistics Canada, net worth in that country hit the new high of “$193,500 for every Canadian, up from $190,200 at the end of 2011″ and the main contributors were stocks (1.8% gain) and real estate at 1% gain.

On the other hand, two single most important metrics on a mortgage application are not debt to “net worth” but mortgage payment against income, and monthly payments against income (provided sufficient LTV).

Any shock on income would wobble any mortgage irrespective what the “net worth” is.

With sagging productivity, and possible cooling in the commodity space that drives much of Canada’s income, implosion of Europe need not happen for Canada to find itself in some financial distress that will challenge these notions of “net worth”.