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Debt-to-Income Ratio
(redirected from Debt/Income Ratio)

   Also found in: Wikipedia 0.02 sec.
Debt-to-Income Ratio
The amount of an individual or company's gross income that it spends on debt service as a percentage of its total gross income. The higher the DTI is, the less likely it is that the individual or company will be able to repay debt. As a result, financial institutions use the DTI in informing decisions on whether or not to make loans. Often, the "debt" in the term refers to all liability payments (such as employee wages, taxes, and utility bills) and not simply to debt.


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Accordingly, we have investigated the debt/income ratio using three different measures of income: national income (Historical Statistics, series F7), Romer's (1988) measure of gross national product (GNP) for 1919-28, combined with GNP for 1929 and after as presented in National Income and Product Accounts, 1929-82, and Balke and Gordon's (1986) measure of GNP.
She noted that the ratio of house prices to average earnings was 'certainly considerably above its long-term trend, and the overall debt/income ratio has been rising steadily.
According to the projections in the March Inflation Report, the household sector's debt/income ratio (ie household borrowing as a percentage of disposable income) will be around 120% for the next three to four years.
 
 
 
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