According to the Ministry of Internal Affairs and Communications’ National Survey of Family Income, Consumption and Wealth (published in 2024), financial liabilities among younger households have increased significantly, while rising long-term interest rates are expected to increase the interest burden on home loans.
Following the 2024 results of the National Survey of Family Income, Consumption and Wealth, conducted once every 5 years, it has been pointed out that financial liabilities have increased significantly among younger and middle-aged households. Approximately 80% of home loans carry variable interest rates. Although the interest burden was effectively close to zero during the period of low interest rates, the amount of payments may now increase as long-term interest rates rise and the Bank of Japan raises its policy rate.
Long-term interest rates have risen from around 0.6% at the beginning of 2024 to approximately 3.1% currently, while the Bank of Japan’s policy rate has also been raised from the 0% range to 1.25%. If variable interest rates rise by a cumulative 1.25%, annual interest payments would increase by approximately ¥375,000 on a ¥30 million home loan balance and approximately ¥625,000 on a ¥50 million balance.
Net financial liabilities have increased more slowly than gross liabilities, with a tendency for the increase in assets to be offset by growth in equities and other securities. Unconventional monetary easing is said to have expanded loans among younger households while also driving up unrealized equity gains, contributing to an increase in financial assets. This has led to views that monetary policy may face difficulties going forward.
Asset trends differ between older people in households of 2 or more and those in single-person households. Net financial assets have tended to remain flat among people in their 60s and older, but while single-person households continue to hold savings in their 70s and 80s, insurance holdings have been declining. Younger households are seen as increasingly shifting assets toward securities investments as their insurance holdings decline.