WASHINGTON Dec 27 A measure of the burden of
U.S. household debt tumbled in the third quarter to its lowest
level in 29 years, which should help free up more money for
consumer spending and support the economy.
The household debt service ratio -- an estimate of the share
of debt payments to disposable personal income -- fell to 10.61
percent from 10.72 percent in the second quarter, the Federal
Reserve said on Thursday.
It was the lowest level since the fourth quarter of 1983.
A huge debt load, fanned in part by the housing market
bubble, helped trigger the worst U.S. financial crisis since the
Great Depression and efforts to pay down those debts have been a
restraint on consumer spending.
The Federal Reserve has held benchmark overnight interest
rates near zero since December 2008 and has bought around $2.4
trillion in bonds to push other borrowing costs lower, helping
ease the pressure on consumers.
"You have a lot of people refinancing their mortgages at
lower rates," said Gennadiy Goldberg, an economist at TD
Securities in New York. "Some homeowners have more money in
their pockets to spend, which should be positive for the
economic recovery going forward."
The debt service ratio takes into account outstanding
mortgage and consumer debt.
A broader measure of financial obligations that includes
automobile lease payments and the cost of renting a home also
fell in the third quarter, dropping to 15.74 -- the lowest level
since the first quarter of 1984.
Mortgage debt payments dropped to 8.90 percent of disposal
income in the third quarter, the lowest in 11 years, while the
relative cost of rent edged up marginally.