The Bank of Montreal warns that the rapid increase of Toronto home prices could potentially pose a major economic threat, reports The Globe and Mail.

In a recently-released economic forecast for North America, the financial instution pointed out three "risks.” These risks included those from emerging markets that are struggling, the ongoing fight over the U.S. government debt ceiling and the state of residential real estate inventory in Canada’s largest city.

BMO senior economist Sal Guatieri noted that "accelerating home prices in Toronto risk straining affordability further, causing a correction when interest rates normalize and the market is trying to absorb a record number of newly-built condos."

This commentary comes hot on the heels of last week's Toronto Real Estate Board report, which showed that average selling prices surged more than 9 per cent to $526,528 in January, as compared last year's statistics. Additionally, the "benchmark" price increased by 7.1 per cent in January, Guatieri said while warning that Toronto's price growth is rapidly outpacing family income.

Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate