Credit card usage has grown exponentially over the past two decades, and the ratio of consumer credit to income has increased 50 percent. Mortgage credit has also become less costly to obtain, and along with the tremendous run-up in real estate prices since the mid-1990s, it has encouraged frequent refinancings with many households tapping into their home equity for consumption needs.
Another theory attributes the fall in the personal savings rate to the generally low level of real interest rates in recent years. This particular theory has both supporters and detractors in the economics profession. Whether raising the rate of return on savings raises or reduces savings propensities remains an open question.