Debt: consumers juggle big burden

The American consumer has long enjoyed a healthy dose of borrowing, but the sustained low interest rates of recent years have launched consumer debt to near-record levels.

The so-called financial obligations rate -- which measures minimum required debt payments as a percentage of disposable income -- rose to 18.4 percent in the second quarter. This is near the record of 18.8 percent in late 2001.

So the incomes of many American households are heavily tied up in monthly debt payments.

"Low interest rates and rampant house price appreciation have really been driving borrowing," said Scott Hoyt, Direct of Consumer Economics at Economy.com. "As long-term rates finally start to rise, the pace of debt accumulation will slow."

Freddie Mac's 30-year fixed-rate mortgage rate rose to an average 5.98 percent this week, and inflation fears could drive it even higher in weeks to come. In the year-ago period, the 30-year mortgage averaged 5.82 percent.

Mortgage borrowing continued its sustained climb, increasing 13.4 percent in the latest quarter -- its seventh consecutive quarter of growth.