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Household debt service ratio rose steeply

The household debt service ratio—i.e. debt payments on outstandiing mortgages and consumer debt versus disposable personal income—rose steeply; a trend exacerbated when car leases, health insurance and property tax payments are factored in as well.


US Household Debt Service Ratio 1985 to 2007

Source: Bureau of Economic Analysis (via Sequoia Capital)
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The Global Financial Crisis
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Immediate triggers of the financial crisis?
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Bubble in US house prices collapsed
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Household debt service ratio rose steeply
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Personal savings rate evaporated
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Demographic changes as baby boomers move to retirement
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Large high risk loans predicated on rising house prices
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Mortgage equity withdrawls no longer self sustainable
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Vicious circle once the collapse gets underway
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