Financial Statistics on Consumer Debt

Every quarter since 1980, the Federal Reserve has published the Household Debt Service and Financial Obligations Ratios that measure the ratio of debt payments to personal disposable income. (Disposable income is defined as personal income after personal taxes.)

The Fed separates homeowners and renters into different categories in these studies. For homeowners, they separate mortgage debt from other consumer debt. So if you are a homeowner who earns $4000 a month after taxes, but owe $1000 towards a monthly mortgage, car payment, home insurance, property taxes, and consumer debt, your total debt to disposable income ratio would be 25%.

Homeowners' debt ratios

The most recent data is for the 3rd quarter of 2009. In that quarter, the homeowner’s non-mortgage debt ratio was 5.7%, meaning that the lowest it has been since the 2nd quarter of 1996. In the last 30 years, the lowest that ratio has been is 4.56% in the 4th quarter of 1992. The highest it has been is 6.66%, which has happened twice, once in the 3rd quarter of 2003 and once in the 1st quarter of 2005.

For homeowners, the highest mortgage debt ratio was recorded in the 1st quarter of 2008. It was 11.3% of their disposable income. The lowest was 8.18% in the 1st quarter of 1980. The ratio for the 3rd quarter of 2009 has come down slightly from the peak, coming in at 10.66%.

The highest total debt ratio for homeowners was also in the 1st quarter of 2008 with 17.58% of disposable income owed to mortgage and consumer debt. The lowest total was in the 4th quarter of 1980 at 13.4%. The 3rd quarter of 2009 measured total homeowner debt obligation at 16.36%.

Renters' debt ratios

Renters have had a consistently higher debt obligation ratio than homeowners, coming in at 24.5% in the most recent quarter. The highest this metric has been was 31.04% in the 1st quarter of 1988. The lowest was in the 4th quarter of 1982, coming in at 22.41%.

While renters have always had higher ratios, how much higher has varied. The greatest difference between the homeowners and renters was in the 3rd quarter of 2001, when renters owed 30.96% and homeowners owed 15.19%. That was a 15.77% margin. In the 2nd quarter of 2008, renters owed 24.48% and homeowners owed 17.03% for a margin of only 7.45%. The margin for the latest quarter was 8.14%, well below the median margin of 10.36%.

The chart below visually displays the total obligation for homeowners and renters for each quarter since 1980. You can see that the renter’s ratio spiked in the early 2000s while the homeowner’s ratio grew steadily. Over the last few years, the renter’s ratio has come back down while the homeowner’s ratio has continued to rise until the last few quarters.