Financial Obligations Ratio: 14.20% in Q3 2023
The financial obligations ratio moved to 14.20% in Q3 2023, up 0.09 from 14.11% in Q2 2023. Year-over-year, the reading is down 0.15 from 14.35%.
Financial Obligations Ratio - Historical Chart
Household Financial Obligations as a Percent of Disposable Personal Income. Gray shaded areas indicate U.S. recessions.
Source: Federal Reserve Bank of St. Louis (FRED), Series FODSP. Shaded areas = NBER recession dates. Updated 2026-03-10.
What the Q3 2023 Data Shows
At 14.20%, the financial obligations ratio in Q3 2023 is below the 10-year average of 14.61% by 0.41pp. The reading has been mixed recently, fluctuating without a clear directional trend over the past 4 quarters.
The financial obligations ratio (FRED series FODSP) expands on the debt service ratio by adding non-debt fixed costs: rent payments for tenants, auto lease payments, homeowner insurance premiums, and property tax payments. The result is the most comprehensive measure of household financial commitments relative to income.
The FOR provides a fuller picture than the DSR because housing costs extend beyond mortgage principal and interest. Property taxes and insurance have been rising rapidly in many markets, adding to household budget pressure even for homeowners with locked-in low mortgage rates.
Quarterly data from the Federal Reserve Board.
What This Metric Measures
This page tracks the ratio of all recurring household financial obligations to disposable income, including mortgage and consumer debt payments plus rent, auto leases, homeowner insurance, and property taxes. The data comes from the Federal Reserve Bank of St. Louis FRED database, series FODSP, updated quarterly.
Historical Context
The all-time peak was 18.16% in Q4 2007 — roughly 1.3x the current level. The all-time trough was 12.43% in Q1 2021. During COVID-19 in 2020, the reading hit 14.61% (Q1 2020). Year-over-year, the metric has moved -1.0%.
Why It Matters
The FOR captures costs that the debt service ratio misses. A homeowner with a low fixed-rate mortgage can still be squeezed by soaring property taxes and insurance premiums. A renter faces rent increases that often outpace wage growth. When the FOR climbs, the amount of truly discretionary income available for restaurants, retail, and services shrinks -- which directly affects small business revenue.
What This Means for Business Owners
Understanding where this metric stands relative to historical norms helps business owners make better borrowing decisions. Metrics far from their 10-year average often signal turning points that affect the cost and availability of credit.
Financial Obligations Ratio - Frequently Asked Questions
The FOR is 14.20% as of Q3 2023, per FRED series FODSP. It measures all recurring household fixed costs -- debt payments, rent, auto leases, insurance, and property taxes -- as a share of disposable income.
The DSR counts only debt payments (principal and interest). The FOR adds rent, auto leases, homeowner insurance, and property taxes. The FOR is typically 3-4 percentage points higher than the DSR because of these additional obligations.
The FOR peaked at 18.1% in Q3 2007 just before the financial crisis. Levels above 17% have historically been associated with rising consumer stress and credit losses. The pandemic-era low was around 13.8%.
Property taxes and homeowner insurance premiums have been increasing rapidly. Rent inflation has pushed up the FOR for tenants. New auto loans and credit card rates are higher. These forces push the FOR up even when many mortgages are fixed at low rates.
Student loans are included in the underlying debt service component. The resumption of student loan payments after the pandemic forbearance period is one of the factors pushing the FOR higher.
FRED series FODSP from the Federal Reserve Board. Quarterly, seasonally adjusted. Methodology is documented in the Fed's Household Debt Service and Financial Obligations Ratios publication.
Related Data & Guides
Data sourced from the Federal Reserve Economic Data (FRED) maintained by the Federal Reserve Bank of St. Louis. Updated monthly when new data is released.