The debt service ratio for the household sector fell again in 1Q04 to 12.98%, the lowest level since late 2001 as estimated the US Federal Reserve Bank.

The household debt service ratio estimates the ratio of debt payments to disposable personal income. Debt payments consist of the estimated required payments on outstanding mortgage and consumer debt.

A companion financial obligations ratio also fell to 18.09%, its lowest since late 2001. This ratio adds automobile lease payments, rental payments on tenant-occupied property, homeowners' insurance, and property tax payments to the debt service ratio.

The decline in the debt-servicing burden occurred despite a very recent pickup in the amount of mortgage interest paid, though, growth of not quite 4% lagged disposable income growth of over 6%.

Lower interest rates through 1Q helped restrain the growth in interest paid. In 2Q, however, the average interest rate on a 30-Year mortgage rose roughly 50 basis points versus 1Q.

The financial obligations data are derived from the Fed's Survey of Consumer Finances which is discussed in this paper.

Yesterday's testimony by Chairman Greenspan before the Senate Banking Committee can be found here.