According to the latest available data, total household debt grew at an annual rate of 10 percent between the end of 1999 and the first quarter of 2004; in comparison, after-tax household income increased at a rate of about 5 percent.
But looking below the aggregate data, we must understand that the rapid growth in household debt reflects largely a surge in mortgage borrowing, which has been fueled by historically low mortgage interest rates and strong growth in house prices.