The Financial Obligations Ratio (FOR) and the Debt Service Ratio (DSR) for the fourth quarter (4Q/16) edged downward and continue to hover at near record lows according to CardData.
According to the Federal Reserve, on a seasonally adjusted basis, the FOR slipped downward to 15.40% in 4Q/16, compared to 15.41% in 3Q/16 and 15.40% in 4Q/15. The DSR decreased to 9.98% in the fourth quarter of this year, compared to 9.99%% in second quarter, and 9.99% 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 slightly up throughout 2016.
According to the Federal Reserve, revolving consumer credit outstanding stood at $998.9 billion for 4Q/16, compared to $937.9 billion for 4Q/15, and $891.5 billion for 4Q/14.
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
2012: $845.7 billion
2013: $857.7 billion
2014: $891.5 billion
2015: $937.9 billion
2016: $998.9 billion
Source: Federal Reserve
NOTE: All Figures Revised & Updated as of 04/06/17