by Calculated Risk on 6/13/2007 12:02:00 PM

The Federal Reserve reports that household debt service, as a percent of personal disposable income (DPI), declined slightly in Q1 to 14.33% from 14.49% in Q4 2006. The homeowner mortgage Financial Obligation Ratio (FOR) also declined slightly.

Click on graph for larger image.

This graph shows the homeowner mortgage FOR since Q1 1980. The ratio is near an all time high, even though interest rates are still fairly low.

Note: The Fed cautions that it is useful to look at changes in the ratio, not the absolute number:

... the calculated series is only a rough approximation of the current debt service ratio faced by households. Nonetheless, this rough approximation may be useful if, by using the same method and data series over time, it generates a time series that captures the important changes in household debt service payments.

This shows that households are dedicating a near record percentage of their DPI to debt service, but also that the situation is improving slightly. Of course with rising interest rates, we might see record levels again in Q2.