The Federal Reserve released the “Household Debt Service and Financial Obligations Ratios” for Q3 2005 today.
The household DSR (Debt Service ratio) set another record at 13.75%, up from 13.53% in Q2 ’05.
The owner FOR (Financial Obligation Ratio) set a new record of 16.61%, up from 16.34% in Q2 ’05. (edit: fixed typo)
The mortgage portion of the FOR set a new record at 10.76%, up from 10.51% in Q2 2005.
DEFINITIONS: The household debt service ratio (DSR) is an estimate of the ratio of debt payments to disposable personal income. Debt payments consist of the estimated required payments on outstanding mortgage and consumer debt.
The financial obligations ratio (FOR) adds automobile lease payments, rental payments on tenant-occupied property, homeowners’ insurance, and property tax payments to the debt service ratio.
With low interest rates, one might expect the mortgage portion of the FOR to be lower – not higher! The fourth quarter will probably even be higher as interest rates rise, and also from the impact of the increase in the minimum credit card payments.
Best to all, CR CalculatedRisk