The Financial Obligations Ratio (FOR) and the Debt Service Ratio (DSR) for the third quarter (3Q/16) edged upward, but continue to hover at near record lows.
According to the Federal Reserve, on a seasonally adjusted basis, the FOR slipped upward to 15.44% in 3Q/16, compared to 15.43% in 2Q/16 and 15.39% in 3Q/15. The DSR increased to 10.01% in the third quarter of this year, compared to 10.00% in second quarter, and 9.97% one-year ago.
The FOR peaked at 18.13% in the fourth quarter of 2007. Since peaking at 13.18% in the fourth quarter of 2007, the beginning of the Great Recession, the DSR has declined steadily since, dipping into single digits for the first time in the fourth quarter of 2012 (9.87%).
However, consumers of late have been taking on more debt, up 6% year-on-year (YOY) and up 11% from two years ago. Furthermore, credit card delinquency and charge-offs have been ticking up in 2016.
According to the Federal Reserve, revolving consumer credit outstanding stood at $979.0 billion for 3Q/16, compared to $966.2 billion for 2Q/16, and $924.2 billion for 3Q/15.
The household 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 is a broader measure than the Debt Service Ratio. It includes rent payments on tenant-occupied property, auto lease payments, homeowners’ insurance, and property tax payments.
U.S. FINANCIAL OBLIGATIONS RATIO
U.S. CONSUMER DEBT SERVICE RATIO (seasonally adjusted)
Revolving Consumer Credit Historical
3Q/14: $883.4 billion
4Q/14: $890.0 billion
1Q/15: $895.9 billion
2Q/15: $911.5 billion
3Q/15: $924.2 billion
4Q/15: $937.9 billion
1Q/16: $949.1 billion
2Q/16: $966.2 billion
3Q/16: $979.0 billion
Source: Federal Reserve; CardData
NOTE: All Figures Revised & Updated as of 12/21/16
This Report is Updated Quarterly Along With 103 Other Payment Industry Analysis Reports and Is Available in CardData (subscription required)