As an indicator of stress, this debt-service measure has many advantages over debt-to-income ratios, but it is admittedly sensitive to assumptions about household debt contracts. The Federal Reserve publishes both the ratio of households’ debt-service to their incomes and a broader financial obligations ratio because debt payments are not the only regular payments faced by households.
The financial obligations ratio incorporates other recurring expenses, such as rents, property taxes, and payments associated with homeowners’ insurance and auto leases, that might subtract from the uncommitted income available to households. The Federal Reserve also calculates separate aggregate financial obligations ratios for homeowners and renters.