by Calculated Risk on 9/28/2005 05:22:00 PM

The Federal Reserve released the "Household Debt Service and Financial Obligations Ratios" for Q2 2005 today.

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.

The household DSR (Debt Service ratio) set another record at 13.55%, up from 13.46% in Q1 '05.

The owner FOR (Financial Obligation Ratio) set a new record of 16.37%, up from 16.25% in Q1 '05.

The mortgage portion of the FOR set a new record at 10.55%, up from 10.41% in Q1 2005.

With low interest rates, one would expect the mortgage portion of the FOR to be lower - not higher! The third quarter will be even higher, and the increase in the minimum credit card payments will impact the 4th quarter DSR.