The debt service-to-income (DSTI) ratio shows the portion of a household's disposable earnings needed to cover scheduled payments on its loans. It is used by lenders and authorities to gauge whether borrowers have sufficient cash flow to manage their debts and to identify potential pressure in household lending. Elevated values may indicate limited financial flexibility, especially when borrowing costs rise or household income falls.
Source: European Central Bank (ECB) (source). This glossary entry is an independently worded adaptation of the cited information.