In five years time, U.S. households reduced their total outstanding debt by $1.3 trillion as mortgage debts either paid off or were written down, researchers with the Federal Reserve Bank of New York claim in a new report.  

But all this credit wariness comes at a cost, according to the Fed study, which is titled 'The Financial Crisis at the Kitchen Table: Trends in Household Debt and Credit.'

"While household debt pay-down has helped improve household balance sheets, it has also likely contributed to slow consumption growth since the beginning of the recession," the Fed researchers asserted.

Some of the more notable improvements occurred on the mortgage side of the lending spectrum. Fresh mortgage delinquencies reached a new low of $140 billion in the third-quarter of 2012.  However, a large amount of mortgage debt was also cleared through the foreclosure process and other transactions such as short sales in the five-year period following the financial crisis.

Still, the NY Fed Bank says mortgage-related debt accounts for 76% of all household debt, with credit cards, auto loans, student loans and other consumer accounts making up the rest.

As for how consumers are reducing their debt levels, the report says they're either demanding less credit, dealing with a falling supply of credit or benefiting from nonperforming debt being written off by lenders after a spike in default rates.

The report claims consumers reduced a portion of their overall household debt voluntary.

"Holding aside defaults, from 2007 through 2011, consumers reduced their debt at a pace not seen over the last ten years," the study concluded. "A remaining issue is whether this reduced reliance on debt is a result of borrowers being forced to pay down debt as credit standards tightened, or a more voluntary change in saving behavior?"

The answer to that question is both. The Fed researchers noted that "both borrowers and lenders have acted to curtail consumers existing credit in the face of growing delinquencies and broader financial market uncertainty."