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U.S. mortgage burden gets lighter in second quarter

A real estate sign, which indicates the 'new price', stands outside a three-bedroom and one-bath home in Burbank, California October 9, 2007. REUTERS/Fred Prouser

WASHINGTON (Reuters) - Mortgage payments in the second quarter took the smallest bite out of U.S. households' after-tax income in at least three decades, Federal Reserve data showed on Tuesday.

Homeowners spent 7.9 percent of after-tax income on mortgage payments during the period, the lowest in records going back to 1980 and a tenth of a point less than in the prior quarter.

The drop came despite a sharp increase in mortgage rates in May, and could represent a combination of rising incomes and a rush by homeowners to refinance loans before rates rise further.

Interest rates remain historically low, largely thanks to years of ultra-easy monetary policy at the Federal Reserve.

Overall debt service costs for households were the equivalent of 9.9 percent of after-tax income between April and June, which was just above a record low.

(Reporting by Jason Lange; Editing by James Dalgleish)