Debt-to-Income Ratio

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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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References in periodicals archive ?
Given the gradual decline in residential property values and record debt-income ratios, it is projected that households continue improving their balance sheets, though private consumption growth should remain solid.
Although household debt-income ratios remain high, debt-service burdens have fallen appreciably, partly reflecting the refinancing of mortgages at lower interest rates.
As real prices for houses and debt-income ratios fell, we entered a period of asset and debt deflation.
Between 1984 and 1987 the debt-income ratio increased more than 50 percentage points in Norway.
In all leading OECD economies savings ratios were falling and debt-income ratios rising as people were encouraged to borrow more in order to spend more.