APPENDIX 8D. HOUSEHOLD DISCOUNT RATE DISTRIBUTIONS 

TABLE OF CONTENTS 

8D.1 INTRODUCTION .................................................................................................. 8D-1 

8D.2 DISTRIBUTION OF REAL INTEREST RATES FOR CONSUMER DEBT 

CLASSES INCLUDING MORTGAGES .............................................................. 8D-1 

8D.3 DISTRIBUTION OF REAL INTEREST RATES FOR FINANCIAL ASSETS... 8D-2 

LIST OF TABLES 

Table 8D.2.1 First Mortgages and Household Debt: Real Interest Rate Distributions.... 8D-2 

Table 8D.3.1 Household Assets: Time-Series of Real Interest Rates.............................. 8D-4 

8D-i 

EERE-2006-STD-0127 COMMENT 64.2
APPENDIX 8D. HOUSEHOLD DISCOUNT RATE DISTRIBUTIONS 

8D.1 INTRODUCTION 

As discussed in section 8.2.4 of Chapter 8, DOE characterized real interest rates 

associated with household mortgages, debt, and assets with probability distributions. The 

sections below provide the probability distributions. 

8D.2 DISTRIBUTION OF REAL INTEREST RATES FOR CONSUMER DEBT 

CLASSES INCLUDING MORTGAGES 

Table 8D.2.1 presents weighted distributions of the real effective interest rates for first 

mortgages and various household debt classes. As reported in sections 8.2.4.1 and 8.2.4.2 of 

Chapter 8, DOE used data from the Federal Reserve Board’s Survey of Consumer Finances 

(SCF) in 1989, 1992, 1995, 1998, 2001, and 2004 to generate the probability distributions for 

first mortgages and household debt. The weights associated with each binned rate correspond to 

the share of each value among the surveyed households. DOE calculated the rates shown in 

Table 8D.2.1 by developing a similar table from each of the six SCF surveys. DOE used the 

average value in each binned rate and then averaged across the six SCF surveys to derive the 

values shown in Table 8D.2.1. 

8D-1

EERE-2006-STD-0127 COMMENT 64.2
Table 8D.2.1 First Mortgages and Household Debt: Real Interest Rate Distributions 

1st Mortgage Home Equity Credit Card 

Installment 

Loans 

Other 

Residence 

Other Line of 

Credit 

Rate 

(%) 

Weight 

(%) 

Rate 

(%) 

Weight 

(%) 

Rate 

(%) 

Weight 

(%) 

Rate 

(%) 

Weight 

(%) 

Rate 

(%) 

Weight 

(%) 

Rate 

(%) 

Weight 

(%) 

0.4 5.4 0.4 10.0 0.0 4.4 0.0 34.1 0.2 12.8 0.1 4.2 

1.6 13.0 1.5 7.1 1.4 1.2 1.4 2.1 1.5 6.3 1.5 2.3 

2.5 28.1 2.5 12.7 2.6 1.7 2.4 4.2 2.5 6.9 2.5 1.6 

3.5 26.5 3.5 23.4 3.5 3.4 3.4 5.4 3.5 12.1 3.5 4.9 

4.4 17.8 4.5 19.2 4.5 4.5 4.5 5.4 4.5 15.3 4.6 5.6 

5.4 5.0 5.4 13.6 5.5 5.2 5.6 6.7 5.5 19.2 5.6 12.5 

6.4 2.3 6.4 5.2 6.6 6.8 6.6 7.1 6.5 14.3 6.7 10.4 

7.4 0.9 7.5 4.2 7.4 4.3 7.5 3.5 7.5 6.5 7.6 5.5 

8.5 0.4 8.5 2.0 8.6 5.5 8.6 4.1 8.6 2.9 8.6 8.3 

9.4 0.2 9.5 1.1 9.6 5.7 9.5 3.7 9.4 1.6 9.5 9.3 

10.5 0.1 10.5 0.6 10.6 5.5 10.6 3.2 10.6 0.4 10.5 7.9 

11.7 0.1 11.8 0.2 11.5 6.2 11.5 1.9 11.6 0.5 11.6 6.6 

12.4 0.1 12.7 0.3 12.5 5.2 12.5 2.7 12.6 0.5 12.5 6.7 

13.3 0.0 13.4 0.1 13.6 4.8 13.5 1.8 14.8 0.4 13.5 1.9 

14.4 0.0 14.7 0.2 14.7 9.2 14.7 3.8 15.7 0.1 14.7 3.5 

16.9 0.0 15.0 0.0 15.6 7.8 15.6 1.8 16.6 0.3 15.6 2.2 

23.2 0.0 17.0 0.0 16.4 6.1 16.4 2.1 17.9 0.1 16.4 2.5 

17.5 0.0 17.6 5.7 17.6 1.9 17.4 1.0 

42.7 0.1 18.4 1.9 18.5 1.3 18.5 0.3 

19.3 2.3 19.4 0.7 19.1 1.4 

20.4 1.1 20.5 0.7 20.2 1.0 

21.4 0.4 21.4 0.3 21.1 0.0 

22.5 0.3 22.2 0.2 22.1 0.2 

23.6 0.1 23.4 0.3 23.5 0.3 

24.6 0.2 24.6 0.4 

25.5 0.2 25.2 0.2 

26.3 0.1 26.6 0.0 

36.9 0.0 27.8 0.0 

28.4 0.0 

29.3 0.1 

43.6 0.0 

44.3 0.0 

47.2 0.0 

8D.3 DISTRIBUTION OF REAL INTEREST RATES FOR FINANCIAL ASSETS 

Table 8D.3.1 presents the time series of real effective interest rates associated with 

various household asset types. As reported in section 8.2.4.2 of Chapter 8, DOE used data from

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EERE-2006-STD-0127 COMMENT 64.2
the various sources to generate the probability distributions for each of the asset types identified 

in Table 8D.3.1. For each asset, the average, minimum, maximum, and standard deviation are 

provided. DOE developed probability distributions based on the average value and standard 

deviation. Because the use of the standard deviations yield distributions with negative values, 

DOE truncated the lower end of the normal distribution at a discount rate of zero. DOE also 

truncated the higher end of the normal distribution in equal proportion to the truncation at the 

lower end to maintain the average values above in Table 8D.3.1. 

8D-3

EERE-2006-STD-0127 COMMENT 64.2
Table 8D.3.1 Household Assets: Time-Series of Real Interest Rates 

Year 

Savings 

Accounts 

(%) 

CDs 

6 Months 

(%) 

Treasury 

Savings 

Bonds 

(%) 

Corp AAA 

Bonds 

(%) 

Stocks S&P 

500 

(%) 

Mutual 

Funds 

(%) 

1977 - -0.6 1.2 1.4 -12.7 -8.0 

1978 - 0.9 0.8 1.1 -1.0 -0.4 

1979 - 0.1 -1.9 -1.5 6.4 3.7 

1980 - -0.5 -2.0 -1.4 16.1 10.1 

1981 - 5.0 2.8 3.5 -13.6 -8.1 

1982 - 6.0 6.2 7.2 13.4 11.0 

1983 - 5.9 7.7 8.6 18.5 14.9 

1984 5.5 6.1 7.8 8.0 1.8 3.8 

1985 5.4 4.5 7.0 7.5 26.7 20.1 

1986 6.0 4.6 5.8 7.0 16.3 12.8 

1987 3.3 3.2 4.8 5.5 2.1 3.0 

1988 3.1 3.6 4.6 5.4 11.9 9.5 

1989 3.0 4.1 3.5 4.2 25.4 18.1 

1990 2.4 2.6 3.0 3.7 -8.0 -4.3 

1991 2.7 1.6 3.8 4.4 25.0 17.9 

1992 2.1 0.7 4.5 5.0 4.4 4.4 

1993 1.1 0.3 3.5 4.1 6.8 5.7 

1994 1.3 2.3 4.7 5.3 -1.2 0.8 

1995 2.2 3.1 3.9 4.6 33.4 23.6 

1996 2.0 2.4 3.6 4.3 20.3 14.7 

1997 2.7 3.4 4.2 4.9 28.9 20.7 

1998 3.4 3.8 4.0 4.9 26.4 18.9 

1999 2.3 3.2 3.6 4.7 18.3 13.4 

2000 1.7 3.1 2.5 4.1 -12.0 -7.2 

2001 1.8 0.8 2.6 4.1 -14.3 -8.7 

2002 1.3 0.2 3.8 4.8 -23.2 -14.2 

2003 -0.2 -1.1 2.6 3.3 25.6 17.9 

2004 -0.7 -0.9 2.3 2.9 7.8 6.0 

2005 -0.6 0.3 1.2 1.8 1.4 1.3 

2006 0.8 2.0 1.6 2.3 12.0 8.6 

2007 1.9 2.3 1.9 2.6 2.6 2.4 

Average 2.3% 2.4% 3.4% 4.1% 8.6% 6.8% 

Minimum -0.7% -1.1% -2.0% -1.5% -23.2% -14.2% 

Maximum 6.0% 6.1% 7.8% 8.6% 33.4% 23.6% 

Std. Dev. 1.7% 2.1% 2.3% 2.3% 14.8% 10.1% 

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EERE-2006-STD-0127 COMMENT 64.2