The Bank of Canada (BoC) warned in its latest financial system review on Thursday that lower oil prices could lead to widespread job losses and falling incomes. But the central bank added that the probability of a recession remains low.

The BoC said that the increasing level of household debt and the overvalued real estate market are key vulnerabilities in the financial system. According to the financial system review, the risk of a correction in house prices has "increased marginally".

"There's more debt to income, relatively, than we've ever seen before," the BoC Governor Stephen Poloz said.