The trend in debt levels appears to have plateaued, although the very recent observations make this less clear (household credit growth ran at 8.5 percent annually in the three months to August 2016). Nevertheless, the concern from a financial stability viewpoint is a high concentration of debt in the housing market, particularly when house prices are significantly over-stretched against conventional metrics, such as income.
High and rising debt levels amongst households leave them increasingly vulnerable to a deterioration in economic conditions or normalisation of currently-low mortgage rates. To assess more rigorously whether the household sector has exhibited lower consumption out of wealth than it did during the “excessive” 2000s, we have undertaken some updated  15  econometric modelling.