Canadian households owed $1.88 trillion in outstanding debt in September, as the high cost of housing in some markets pushed borrowing levels higher, according to RBC Economics.

The annual increase in the consumer debt load is five per cent, much greater than the pace of inflation.

Households added $74.7 billion in mortgage debt over the year to September, about 5.9 per cent more than was borrowed in the previous year.

And while consumer credit grew 3.6 per cent in the quarter, mortgage debt increased by 6 per cent.

While there is concern that housing is priced at a level that shuts many young families out of markets such as Toronto and Vancouver, the rapid pace of sales indicates that many Canadians are still plunging into the market.

Cheap lending rates in combination with tight supply of housing in some cities are boosting the cost of housing, forcing Canadians to take bigger mortgages, RBC said in its research report.

Are consumers over-stretched?

RBC sees debt accumulation at "near-cycle highs."

Business financing growth edged up at 6.6 per cent a year, but there are signs of a tightening of credit conditions in sectors hurt by low oil prices, the report said.

The Bank of Canada has made two rate cuts this year in an effort to stimulate the economy, and RBC says this has supported household spending.

But more rate cuts are unlikely, it said.

"This strength of the consumer along with a turnaround in other sectors of the economy is expected to support a rebound in real GDP growth in the second half of the year, thereby limiting the need for further policy cuts by the Bank of Canada," the report said.