What is the 'Financial Obligation Ratio - FOR'

The financial obligation ratio is the ratio of household debt payments to total disposable income in the United States, and is produced by the Federal Reserve. It measures how much household income is being spent on repaying debts and other financial obligations.

BREAKING DOWN 'Financial Obligation Ratio - FOR'

The financial obligation ratio is a broader measure than the household debt service ratio (DSR). In addition to the required mortgage payments and scheduled consumer debt payments that comprise the DSR, the FOR includes rent payments on tenant-occupied property, auto lease payments, homeowners' insurance and property tax payments.

Including rental payments on primary residences as well as other housing-related expenses reflects the household sector’s increasing homeownership. Including automobile lease payments reflects the growth of the automobile leasing market.

Over time, the burden of financial obligations faced by American households will vary depending on changes in debt, interest rates and income. The higher the FOR, the higher the risk that households will be unable to meet their financial obligations.

This data is quarterly. However, it is not released by the Fed on a published schedule and is subject to unpredictable revisions and lags.

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