The Bank of England confirmed that borrowing by individuals has topped a trillion pounds (£1,000bn), and Nationwide said the annual rate of increase in house prices was 20.3 per cent the highest for a year.

The conclusion is obvious: we are about to be overwhelmed by a rising tide of debt just as an unsustainable surge in house prices ends in an inevitable crash. The airwaves and the newspapers have been full of pundits predicting that disaster is just round the corner. But is it?

Let's take borrowing first. The doomsayers have been having a field day for two reasons. A trillion pounds is an unimaginable amount of money, so passing the threshold appears to signal something important. It also happens to be roughly the same as the UK's gross domestic product, so we now owe as much as we earn.

Should we worry about it? Household debt is high by historical standards. But debt interest payments as a percentage of household income are about half the level of a decade ago, thanks to low interest rates.

Also, we have been spending our borrowed money relatively wisely. Charles Bean, the Bank's chief economist, says that talk of a “debt timebomb” is overdone because most of the debt has been used to acquire financial assets rather than splurged on holidays and DVD recorders. On the other side of the ledger, we have collective assets worth many times our collective debt houses alone are worth something like three trillion pounds.

Only about £177bn of the total £1,004bn we owe represents things such as credit card debts and personal loans. There are clearly grounds for concern about the temptations of easy credit. Some people have borrowed far more than is sensible. The National Consumer Council says that 6m families are struggling with debt, and Citizens' Advice says that requests for help with managing debts are up by 44 per cent since 1998.

Overall, though, we don't seem to be in bad shape. Research by PwC, the professional services firm, suggests that levels of borrowing and defaults compared with average balances are lower than in the US. PwC expects levels of unsecured debt to go on growing until they hit US levels.

But even that need not be a cause for alarm. MORI, which analyses credit card data from 48,000 consumers, says that only one person in every hundred with a credit card is in danger of getting into unmanageable debt.

There is an area of concern, though. Most of our collective borrowing the Bank of England estimates the figure at 82 per cent is secured against dwellings. Since house prices have been rising even faster than borrowing, that provides a substantial cushion.

What happens, though, if the value of dwellings falls? The National Institute of Economic and Social Research, a respected economic think tank, chose this week to suggest, in its latest quarterly report, that house prices need to fall by 30 per cent to return to their “equilibrium level”. To achieve that, said the NIESR, the Bank should raise rates by half a percentage point to 5 per cent when its monetary policy committee meets next week.

Concerns about the level of house prices had been abating. Until this week, most recent surveys including Nationwide's suggested that the rate of increase was easing, which could plausibly be interpreted as evidence that the market was heading for a soft landing. Nationwide's latest figures cast doubt on that reading. The index rose by 2.1 per cent this month, the biggest monthly increase since February, and the annual rate now stands at its highest level for 14 months.

There are counter arguments. Although it is closely watched, the Nationwide index is only a partial indicator of the housing market; it could be wrong. The Hometrack index, published on Monday, reported that prices had fallen by 0.1 per cent this month. The Centre for Economics and Business research, whose model takes into account a range of supply side factors such as population growth and land shortages, insisted yesterday that the NIESR had hugely overestimated the overvaluation of house prices, which it puts at a mere 3 per cent.

The Bank's announcement on debt also showed that the number of loans approved for house purchases fell in June to 114,000 from 124,000 in May, continuing a downward trend since it peaked at 132,000 in December. The value of loans approved also fell in June to £25.9bn from £26.2bn in May.

Nevertheless, the Nationwide and NIESR figures contribute to a general air of concern about house prices.

I doubt that the MPC will raise rates by half a percentage point next week that would amount to a reversal of its previous strategy of gradual increases but it will probably announce a quarter point move, and if that doesn't work rates will go up again at least another quarter point before the end of the year and possibly more.

I remain convinced, as I've noted here before, that a housing market crash is neither inevitable nor desirable, although a substantial slowdown followed by a period of stagnation is clearly warranted. But Nationwide and NIESR have succeeded in making me considerably more nervous about the possibility of a nasty end to the cycle than I was.

A correction on the scale envisaged by NIESR would be extremely painful for millions of investors in property, including me. It would also make that trillion pound debt look a lot less sustainable because it would wipe 30 per cent off the value of assets against which the debt is secured.

We will know within a couple of months whether the Nationwide figures are just a blip. But we need to remember that the market remains inherently unpredictable. It has slowed before without crashing, and other countries have recently experienced house price booms that have not ended in disaster notably Australia.

The brave (or perhaps foolhardy) will hang on in there, comforting themselves with the thought that even a 30 per cent fall in prices amounts to less than a couple of years of inflationary profits. I shall be one of them. For the more twitchy, the balance of advantages may be shifting towards selling up before it is too late.

kevin.brown@ft.com