US household debt service ratio at record high-Fed

The U.S. household debt service ratio climbed to a record high in the first quarter of 2005, the Federal Reserve said in a study, but a broader measure of debt was below recent peaks.

The report showed that even though homeowners' mortgage obligations have risen as a share of their financial obligations, homeowners have kept consumer debt in check. The sporadically released survey was posted to the Fed's website late on Wednesday.

Fed officials including Chairman Alan Greenspan have amplified warnings recently that persistently low mortgage interest rates have led to house price gains that are unsustainable in some areas and are spurring risky mortgage lending and speculative buying.

The household debt service ratio -- an estimate of the ratio of debt payments to disposable personal income -- rose to 13.40 percent in the first three months of 2005, eclipsing the previous high of 13.36 percent in the fourth quarter of 2002.

However, the broader financial obligations ratio, which adds auto lease, rental, homeowners insurance and property tax payments to the debt service ratio, edged up to 18.45 percent but was short of the record high of 18.84 percent notched in the last quarter of 2002.

In a reflection of the four-year-old U.S. housing boom, the mortgage component of the financial obligations ratio for homeowners rose to 10.35 percent, the highest since the third quarter of 1991. Homeowners' overall financial obligations ratio edged up to 16.16 percent, the highest since the fourth quarter of 2002.

Regarding consumer debt, even though its share of homeowners' financial obligations edged up to 5.82 percent, it was the first time that ratio was below 6 percent for four consecutive quarters since the last quarter of 1996.