In a special report, Treasury said household debt continued to expand but at a slower level than before. Debt was slightly lower as a proportion of disposable income.
"This implies that either households are broadly comfortable with the historically high debt share of income or that a large proportion of the adjustment has yet to come.
"Both scenarios have important implications for saving."
Household spending grew strongly for most of the past decade but in 2008 it began to fall as consumers adjusted to an onslaught of negative factors, including high levels of indebtedness, high interest rates, falling house prices, tight credit, rising unemployment and low confidence.
The recent boom in mortgage credit left households more highly leveraged - with a higher proportion of debts to assets or income - than probably any period in history, Treasury said.
Household liabilities more than doubled in just six years from $80 billion in 2001 (105% of household disposable income) to $170 billion in 2007 (156%).
The increase in debt was almost entirely due to the accumulation of mortgage debt.
Households had begun to rein in their liabilities with growth in total household credit slowing to 1% in the year ended December 2010, down from an average of 14% between 2001 and 2007.
Consumer debt fell 0.5% in 2010, following a 5% fall in the previous year.
Mortgage debt rose $3.3 billion in the year to December 2010, the smallest rise in 17 years. But when adjusted for house prices, it was less than half the lowest increase on record since 1990, Treasury said.
The recent rise in mortgage approvals pointed to a pick-up in the growth rate of mortgage debt over the year ahead.
Overall, the debt-to-income ratio has fallen by around 10% from its peak of 160% in 2008.
"With household debt continuing to rise, the limited decline in leverage has come from rising incomes. However, with the debt share of income remaining very high, further deleveraging is likely."
How much further the debt-to-income ratio had yet to fall was hard to predict, but history might provide a guide, Treasury said.
The 20-year ratio was around 100% and debt was last at that level in 1999. The 10-year average was around 130%. Debt was last at that level in 2004.
