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OTTAWA -- Bank of Canada governor Mark Carney is advising Canadians not to get overly complacent about their financial security if it is tied to home values.

The bank governor told the Senate banking committee Wednesday the levels of household debt-to -income are elevated at about 163 per cent, and he is not comforted much by the fact household worth is also "very high."

The problem with household assets is that most are tied to real estate, he said, so they can go up and down and are not always liquid.

Carney said he's seen people feel financially secure because their assets are worth more than their debt, then an economic shock occurs and real estate values plummet and they are unable to sell their homes. But they still have monthly mortgage payments to make.

"We've seen it over and over and over again, most recently in the United States, where people get sucked into a balance sheet analysis that says, 'I'm very wealthy because my assets are worth more than my debts,' " he explained.

"But they are illiquid and they can't service their debts because they lose their jobs or interest rates go up or both. And that causes the default."

That's why he has been hammering away at the issue for some time, he said.

According to Statistics Canada's revision of historic measurements published earlier this month, Canadian households now owe a record 163 per cent more than their annual disposable income, about the level that existed in the U.S. prior to the housing collapse.

The revision, released earlier in the month, also showed that Canadians were $7,900 richer than previously thought with a net per capita worth of $190,200.

The fly in the ointment is the majority of those assets were based on current, sky-high real estate values, which many analysts expect to decline.

In the latest Bank of Canada policy review, Carney and his deputy governors noted that while the housing market finally appears to be cooling, debt growth-to-income is expected to keep rising before peaking at the end of 2014.

Still, he said the trends are heading the right way.

"Our warnings about this issue are driven from a position of a country, officials, and individuals being able to do something about it. The horse is not out of the barn," he said.

Carney has been supportive of Finance Minister Jim Flaherty's efforts to make it more difficult for marginal first-time buyers to obtain mortgages, including the latest tightening of lending rules in July.

And Carney has said recently that the Bank of Canada is prepared to act by raising interest rates if necessary -- albeit as a last resort -- to curtail debt accumulation.

The Bank of Montreal (TSX:BMO) also warned Wednesday that using a home as a nest egg is a risky idea and that personal savings must play a role in retirement planning.

A BMO survey showed four-in-10 respondents said they aren't confident in their ability to save for retirement and the same amount are relying on the value of their home to help fund their retirement.

In other testimony, Carney expanded on comments he made the day before at the House finance committee that he believes interest rates need to stay low to help out a weak economy.

Carney told the senators Canada's economy faces a variety of headwinds and risks, from the recession and debt crisis in Europe, slower growth in China, and the high dollar, which makes Canadian exports less competitive in global markets.

"There are a variety of reasons why it's advantageous to have very accommodative monetary policy and that's what we have here in Canada, very accommodative monetary policy," he said.

On Tuesday, he said a modest hike in interest rates is likely before 2015.

The comments reinforce a consensus among markets and economists that the central bank isn't anxious to raise rates and likely won't move until at least late 2013, or more likely, sometime in 2014.

Carney gave another reason why he might be prepared to stand pat on interest rates -- the U.S. fiscal cliff.

He said he expects politicians in Washington to reach a compromise to keep in place tax cuts and levels of spending to boost the economy after this year, and hence avoid a fiscal cliff, but noted no-one can be sure.

Fear of the fiscal cliff is real enough, he said, that he believes it is delaying some investment decisions in America and contributing to slow growth.