The vigorous demand was financed in part by increased borrowing, and the household debt ratio continued to rise in the second quarter. Household debt as a percentage of disposable income rose from 60 per cent in the first quarter to 62 per cent in the second quarter of 2005.
However, because of the low nominal interest rate environment, debt servicing cost as a percentage of disposable income remained unchanged at a relatively low level of 6½ per cent. The monetary and credit aggregates have also been increasing at rates consistent with strong domestic demand.