WASHINGTON-Peering a little way down the financial road, a rising interest rate environment will present positives and negatives for consumers. "Rising interest rates will increase the burden of debt.The good news is it will also increase returns on savings," CUNA Chief Economist Bill Hampel told attendees of a personal finance conference sponsored by the Consumer Federation of America Dec. 2. Additionally, the flattening of the yield curve should be beneficial overall. However, consumers may be getting into debt over their heads. In the early 1990s, consumers' debt service ratio-monthly payments to monthly after-tax income-was around 11%. It currently stands over 13%, the highest rate ever. Household consumer debt outstanding to annual disposable income in 1959 was 14%, but in 2004, that percentage was up to 24%. Add the mortgage in there and those figures jump to 49% for 1959 and 107% for 2004, according to Hampel. "Consumer loan charge offs are not as sensitive to the business cycle," Hampel explained, adding, "I think there might be a modest increase in loan charge offs (with rising interest rates) but nothing to really worry about." Mortgage Bankers Association Chief Economist Douglas Duncan sat on the panel on the impact on consumers of rising interest rates. Homeownership is up to 69%, he explained, but that does not represent the industry's risk. He pointed out that more than a third (35%) of homeowners have no mortgage. On the other hand, 11% have two mortgages. Duncan added that delinquencies remain "roughly at a 20-year average." Considering 20 years ago there was no subprime market, which tends to be riskier lending, this is a good sign. Higher homeownership is actually a positive in more ways than the obvious. According to Duncan, homeowners' obligations hold steadier than those of renters, which means they know what to expect from the bills each month. Also serving on the panel, Freddie Mac Chief Economist Frank Nothaft commented, "On a whole, consumers have used (credit) responsibly." He noted that 45-year low interest rates "translated to substantial mortgage activity." Record increases were seen in single-family home construction, home sales, and first time homebuyers, he said. On average home pricing has gone up 10% nationwide, Nothaft said. A self-described anti-"bubblist," he said he doesn't see much of a national housing drop because an oversupply does not exist. Hampel, a "bubblist," said he foresees a correction in home pricing, but it will be more of a fizzle than a burst. Taking the middle road, Duncan said he expected a bubble in certain markets. [email protected]