Household Debt Risk Index (HDRI)

 

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Household Debt Risk Index (HDRI)  

The Household Debt Risk Index (HDRI) is an indicator designed to assess the risk of household debt distress by comprehensively considering not only household income flows but also financial and real assets.

It is calculated by combining the Debt Service Ratio (DSR), which evaluates a household’s debt repayment capacity from an income perspective, and the Debt-to-Asset Ratio (DTA), which assesses vulnerability from an asset perspective.

 

The HDRI is calibrated so that a household with a DSR of 40% and a DTA of 100% is assigned a value of 100. Households with an HDRI exceeding 100 are classified as “at-risk households.”

At-risk households can be further categorized into three groups:

 

• High-risk households, which are vulnerable in both income and asset terms
• High-DTA households, which are primarily vulnerable due to weak asset positions
• High-DSR households, which are primarily vulnerable due to insufficient income relative to debt servicing obligations

It should be noted that at-risk and high-risk households are identified for the purpose of assessing vulnerabilities in debt repayment capacity. Their classification does not necessarily imply that they are currently facing immediate debt default or a critical financial distress situation.

 

* DSR (Debt Service Ratio): Total debt principal and interest payments relative to household income