DP2019-23

Household Debt and Aging in JapanCharles Yuji HORIOKA
Yoko NIIMI

November 14, 2019

Household Debt and Aging in Japan*
By Charles Yuji Horioka and Yoko Niimi
November 2019
Abstract
In this paper, we analyze the borrowing behavior of Japanese households in comparison to theother Group of Seven (G7) countries and also broken down by the age group of the household
head. We find that pre-retirement households (households with a head in the 50-59 age group)in Japan do not have inordinate amounts of debt and that their financial health is satisfactory.
However, we also find that households with a head in the 30-39 age group have shown a sharp
increase in debt holdings in recent years, due partly to the fact that tax breaks for housingpurchase, reforms in the housing loan market since the early 2000s, and expansionary monetary
policy enabled Japanese households to purchase housing at a younger age than they could
previously. We therefore need to monitor the borrowing behavior of this cohort over time as
the Bank of Japan normalizes its monetary policy, especially since households have become
more vulnerable to rising interest rates as the share of households who have chosen variablerate housing loans has increased in recent years.
Keywords: aging, borrowing, debt, homeownership, households, housing, Japan, liabilities,
loans, mortgages, retirement
JEL classification codes: D14, E21, G51, J14, R21
Charles Yuji Horioka
Research Institute for Economics andBusiness Administration
Kobe University
2-1, Rokkodai-cho, Nada-ku
Kobe, Hyogo 657-8501, Japan;
National Bureau of Economic Research;and Institute of Social and Economic
Research, Osaka University; and Asian
Growth Research InstituteTel: +81-78-803-7022
Email: horioka@rieb.kobe-u.ac.jp

Yoko Niimi
Faculty of Policy Studies
Doshisha University
Imadegawa-agaru, Shinmachi-doriKamigyo-ku, Kyoto 602-0047, Japan; andAsian Growth Research InstituteTel: +81-75-251-3460
Email: yniimi@mail.doshisha.ac.jp*This paper was presented at the 2019 Pension Research Council Symposium on “Remaking
Retirement? Debt in an Aging Economy,” held at the Inn at Penn, Philadelphia, Pennsylvania,
USA, on May 2-3, 2019, and was originally published as Pension Research Council Working
Paper PRC WP2019-17, Pension Research Council, The Wharton School, University ofPennsylvania, Philadelphia, PA, USA. The authors are grateful to Karen Dynan, Annamaria
Lusardi, Olivia Mitchell, John Sabelhaus, Nobuyuki Yamori, and other symposium participants
for their valuable comments and to JSPS KAKENHI Grant Number 18H00870 for financial
support. All findings, interpretations, and conclusions of this paper represent the views of theauthors and not those of the Wharton School or the Pension Research Council. © 2019 Pension
Research Council of the Wharton School of the University of Pennsylvania. All rights reserved.

1. Introduction
One of the challenges that population aging poses is the adequacy of saving for old age. Whilepublic pension programs continue to play an important role in people’s old age saving in mostdeveloped countries, the fiscal sustainability of such programs is increasingly being challenged
as a result of population aging. People are therefore increasingly being encouraged to take more
responsibility for securing their financial wellbeing in old age. Japan is no exception, with theshare of the population aged 65 or above being estimated to have been about 28 percent in 2017
and the old-age dependency ratio (the ratio of the elderly population to the working-age
population) being estimated to have been about 46 percent in the same year.1
Lusardi et al. (2018a, 2018b, 2020, and forthcoming) have recently made the alarming
discovery that people in the United States (US) are more likely to enter retirement in debt today
than in past decades, mostly as a result of having purchased more expensive homes with smaller
down payments, and that this may threaten their retirement security (see also Brown et al.
2020a).2 By contrast, Brown et al. (2020b) show that much of the increase in the debt holdingsof the elderly in the US is attributable to affluent households, that their repayment record has
been satisfactory, and that there has not been an accompanying increase in delinquency, whichsuggests that the increased debt holdings of the elderly in the US are not necessarily cause forconcern.
In the case of Japan, since almost 70 percent of total financial wealth is held by households
whose heads are aged 60 or above and more than 90 percent of financial net worth is held bysuch households, 3 empirical work to date has tended to focus more on analyzing possible
reasons for the relatively slow wealth decumulation rates of the retired elderly (e.g., Horioka
and Niimi 2017; Murata 2018; Niimi and Horioka 2019). Nevertheless, given that indebtedness
is likely to have important implications for retirement security, this paper aims to examine
whether the recent phenomenon of increased indebtedness among near retirees is unique to the
US or whether it is also observed in other countries—namely Japan.
The rest of this paper is organized as follows: In the next section, we present and analyze datafrom the Organisation for Economic Co-operation and Development (OECD) on household
debt and wealth in the Group of Seven (G7) countries to see how the US and Japan compare toother countries. In the following section, we conduct a more detailed analysis of householdborrowing behavior in Japan using data from the Family Savings Survey (FSS) and the Family
Income and Expenditure Survey (FIES), both of which are conducted by the Japanese
government, with emphasis on the behavior of pre-retirement households. Given the recent
sharp increase in the debt holdings of households with a head in the 30-39 age group, we also
pay attention to the borrowing behavior of younger households. In addition, we discuss thepossible reasons for the recent increase in debt holdings among young households and whether
or not we need to be concerned about this recent phenomenon. The last section provides someconcluding remarks.
2. International Comparison of Household Borrowing
In this section, we present and analyze data from the OECD on household debt and wealth for
the G7 countries for selected years during the 1980-2016 period to compare household financial
situations across countries and over time. Table 1 shows data on the ratio of household
liabilities (or debt) to household disposable income,4 and as this table shows, all of the G7
countries show an increase in the debt-to-income ratio during the 1980-2016 period,1

presumably because of the development of the financial sector over time, which resulted ingreater access to credit.
Table 1 here
However, Table 1 also shows some variations in trends across countries. For example, the tableconfirms the relatively rapid expansion of debt in the US prior to the 2008-2009 financial crisis,though the debt-to-income ratio in the US seems to have declined since then. As for Japan, arelatively large increase in the debt-to-income ratio was observed earlier, from 1990 to 2005.5
While Japan had the highest debt-to-income ratio among the G7 countries during this period,
Canada, France, and the United Kingdom (UK) now have a higher ratio than Japan.
Table 2 here
We turn next to debt-to-asset ratios. Table 2 shows that the amount of debt relative to assets
also increased until 2010 in the US (from about 14% in 2000 to about 18% in 2010). Only
Canada and the UK had reached this level in 2010, but there has been a decline in the debt-toasset ratio since then in all three of these countries. In the case of Japan, Table 2 shows that thedebt-to-asset ratio peaked earlier (at about 15% in 2000) than in these three countries and thatthe debt-to-asset ratio actually declined during the 1980-2016 period as a whole.
The fact that debt levels relative to income and assets have been declining in Japan since 2000
seems to suggest that the recent phenomenon of increased indebtedness among near retirees in
the US is not observed in the case of Japan. However, in order to reach a more definitive
conclusion, we need to examine data broken down by age group, which is what we do in thenext section.
3. Trends in Household Borrowing Behavior in Japan
In this section, we present and analyze data from the Family Savings Survey (FSS) and theFamily Income and Expenditure Survey (FIES), conducted by the Statistics Bureau, Ministryof Internal Affairs and Communications, on household borrowing behavior broken down by
the 10-year age group of the household head for selected years during the 1980-2017 period.
The FSS is a comprehensive survey of household assets and liabilities that was started in 1959
as a supplement to the FIES, the Japanese equivalent of the US Consumer Expenditure Survey.
The FSS was fully incorporated into the FIES in 2002, but the data for before and after 2002
are fully comparable.
About 8,000 households are randomly selected from throughout Japan using a three-stage
stratified sampling method, and thus the sample of the FSS/FIES is representative of the entire
population of Japan. However, the two most serious defects of the FSS/FIES are that it does
not collect data on holdings of land, housing, and other nonfinancial assets, meaning that the
total assets and the total net worth of households cannot be computed, and that it does notcollect data on the assets and liabilities of single-person households. Thus, we had no choice
but to confine our analysis to two-or-more-person households, but fortunately, the proportionof single-person households is quite small in the 50-59 age group, meaning that excluding themfrom the analysis will not create any serious problems.
Tables 3-10 below show data on two-or-more-person households from these surveys on various
2

aspects of household borrowing behavior broken down by 10-year age group of the householdhead.
3.1. The borrowing behavior of pre-retirement households
We first analyze the borrowing behavior of pre-retirement households (defined as householdswith a head in the 50-59 age group) in Japan in an attempt to shed light on whether their debt
holdings have increased sharply in recent years, as they have in the US. We focus on the 50-59
age group because the retirement age (not only the age at which workers are required to retire
but also the age at which workers can begin receiving public pension benefits) in Japan has
until recently been 60. The retirement age is in the process of being raised to 65 but a retirement
age of 65 has not yet been fully implemented, so our use of a 60 cut-off is justified.
Table 3 here
Table 3 shows that while the proportion of households holding debt in the 50-59 age groupincreased relatively significantly between 1980 and 1985, it was rather stable during thesubsequent 1985-2017 period, fluctuating in the relatively narrow range of 50 to 55 percent.
Moreover, since households in Japan tend to pay off their housing loans upon retirement, only
about one-quarter of households in the 60-69 age group still hold debt. The proportion ofhouseholds holding debt is even lower among households in the 70 or older age group, and it
steadily declined in this age group from about 16 percent in 2005 to about 11 percent in 2017.
Table 4 here
If we look at debt-to-income ratios (see Table 4), we find that the ratio for the 50-59 age groupincreased significantly between 1980 and 2000, but since then it has been relatively stable,
although it increased slightly between 2010 and 2015. By contrast, the debt-to-income ratio
was relatively stable in older age groups throughout the 1980-2017 period.
The figures in Tables 3 and 4 therefore suggest that pre-retirement households in Japan do nothold inordinate amounts of debt and that there has not been a discernible increase in their debt
holdings, suggesting that the recent phenomenon of increased indebtedness among near retirees
in the US does not apply in the case of Japan.
However, recall from the OECD data on the G7 countries that we presented earlier in Table 1
that the debt-to-income ratio peaked in Japan in 1990-2005, which was much earlier than in
the US. Thus, there is a possibility that this might have caused those living through this period
to reach retirement with substantial debt, but our earlier findings showed that this was not thecase.
Lusardi et al.se (2018a, 2018b, 2020, and forthcoming) and Brown et al. (2020b) found thatthose nearing retirement have shown a sharp increase in their debt holdings in recent years in
the US, so it is curious why those nearing retirement in Japan did not show a discernible
increase in their debt holdings. A detailed examination of this issue is beyond the scope of thispaper, but a likely explanation is as follows. As discussed in the next section, a number ofgovernment policies adopted after 2000 such as the deregulation and expansion of the housing
credit market made it easier for households to purchase housing, but this had the effect ofallowing households to purchase housing at a younger age (in their 30s) than previously.
However, most older households (e.g., those in their 40s and 50s) had already purchased3housing even before the new measures were implemented so the new measures did not cause
any changes in their behavior or cause them to increase their debt holdings.
There was, however, a sharp increase in the debt holdings of the 30-39 age group after 2000,
and we turn to a detailed analysis of this phenomenon in the remainder of the paper.
3.2. The borrowing behavior of younger households
While increased indebtedness among near retirees has not been observed in Japan thus far, ourdata show evidence of a sharp increase in borrowing in the 30-39 age group. We therefore
examine the borrowing behavior of younger households in more detail to shed light on theextent and the possible causes of the sharp increase in their debt holdings and to explore thepossibility that the sharp increase in their debt holdings will threaten their retirement security
when they reach retirement age 20 to 30 years from now (see Horioka and Niimi, 2019, for amore detailed analysis).
As Table 3 shows, the proportion of households holding debt in the 30-39 age group ¥increased
significantly during the 2000-2017 period (from about 51% in 2000 to about 62% in 2017) andthe increase was more pronounced than in other age groups. As a consequence, the proportionof households holding debt in the 30-39 age group had almost caught up with that in the 40-49
age group by 2017, even though there was a relatively large gap (about 14 percentage points)
in the proportion of households holding debt between these age groups in 2000.
Table 5 here
If we look at trends in the proportion of households holding debt by cohort (Table 5), we findthat the proportion of households holding debt in the 30-39 age group increased slightly fromabout 51 percent for the 1961-70 cohort to about 56 percent for the 1971-80 cohort but that it
was also relatively high for the 1941-50 cohort for some reason.
Turning to the debt-to-income ratios shown in Table 4, we find that there was a significant
increase in this ratio as well for the 30-39 age group. It almost doubled from about 97 percent
to about 197 percent during the 2000-2017 period. Although the size of the increase is smaller,
we also observe a relatively large increase in the debt-to-income ratio for households whose
heads were in their 20s or 40s during this period. Tables 3 and 4 thus suggest that households
in younger age groups were not only more likely to take out loans but that they were also taking
out larger loans relative to their incomes during the 2000-2017 period.
Table 6 here
Indeed, Table 6 shows that the debt-to-income ratio is much higher for the 1971-80 cohort incomparison to that for older cohorts. The debt-to-income ratio in the 30-39 age group for the
1971-80 cohort was about 150 percent, which is significantly higher than the ratio for the 196170 cohort (about 97%) and more than three times higher than the ratio for the 1941-50 cohort(about 48%).
Table 7 here
Table 8 here4

To see whether the recent sharp increase in the debt holdings of relatively young households isdue to housing loans or to other types of loans, Table 7 shows the share of housing loans in
total loans. This table shows that, as in other age groups, the vast majority (generally 90 to95%) of loans that households in the 30-39 age group have taken out are housing loans. Table
8 also confirms that the loans that households in the 1971-80 cohort have taken out are largely
housing loans, as in the case of older cohorts. In fact, Table 8 shows that there has been an
increase in the share of housing loans in total loans in the 30-39 age group from cohort to cohort.
All of these trends suggest that households in Japan are purchasing houses at a younger age
today than in the past.
Table 9 here
Indeed, Table 9 shows that the homeownership rate increased significantly during the 20002017 period for the 30-39 age group and, to a lesser extent, for the 29 or younger age group.
For instance, in the case of the 30-39 age group, the homeownership rate increased by about
17 percentage points from about 45 to about 62 percent during this period. This provides further
corroboration that the increase in household liabilities among relatively young households inrecent years has been due largely to an increase in housing purchases.
Table 10 here
Figure 1 here
However, it is interesting to find that the homeownership rate in the 30-39 age group was
already relatively high in 1980. It subsequently declined during the 1980s and 1990s, which
may be partly explained by the sharp increase in land prices until the collapse of the bubble
economy in the early 1990s, which may have forced households to abandon or to delay theirhousing purchase plans until a later age (see Figure 1). Table 10 shows that the homeownershiprate in the 30-39 age group for the 1971-80 cohort is comparable to that for the 1941-50 cohort.
However, what is different between these two cohorts is the debt-to-income ratio. While theaverage debt-to-income ratio in the 30-39 age group for the 1941-50 cohort was about 48
percent, the ratio for the 1971-80 cohort was about 150 percent (see Table 6). In other words,
while the 1971-80 cohort managed to have a homeownership rate that is comparable to that forthe 1941-50 cohort, they relied much more on housing loans than the 1941-50 cohort did. Thisis supported by Table 8, which shows that the share of housing loans in total loans in the 30-39
age group increased from about 83 percent for the 1941-50 cohort to about 95 percent for the
1971-80 cohort.
4. The Causes of the Increase in the Housing Debt of Households with a Head Aged 3039
As for why housing purchases and housing loans have increased so much in the 30-39 age
group since 2000, it may be due, at least partly, to institutional factors such as the expansion of
the system of tax breaks for housing purchase, expansionary monetary policy, and reforms of
the housing loan market, which enabled households to purchase housing at a younger age thanthey could previously. We will discuss each of these factors in turn.
4.1. Tax breaks for housing purchase
The Japanese government has offered various tax breaks for housing purchase since 1978,5

partly to promote homeownership and partly to stimulate the economy as a whole. These tax
breaks have typically taken the form of tax deductions that are calculated as a certain
percentage (currently 1%) of the outstanding value of housing loans and that are available fora certain number of years (currently 10 years but soon to be extended to 13 years) if certain
conditions are met. Given that these tax breaks for housing purchase have been repeatedly
expanded, they are likely to have promoted housing purchases as well as the use of housing
loans to finance these purchases.
4.2. Monetary policy
The Bank of Japan has maintained an expansionary monetary policy since at least September
1995, and in particular, it has pursued a so-called “zero interest rate policy” since February
1999 (except during the August 2000 to March 2001 period). This led to a sharp decline in all
interest rates, and interest rates on housing loans were no exception. Moreover, the Bank ofJapan has pursued quantitative easing policies since 2001 and quantitative and qualitativeeasing policies since 2013, and this has increased the supply of credit, including housing credit.
The decline in interest rates and the increased supply of credit are likely to have promoted
housing purchases as well as the use of housing loans to finance these purchases.
4.3. Reforms of the housing loan market
In light of the poor housing conditions and the low homeownership rate in Japan in the early
postwar period, the Japanese government established the Government Housing Loan
Corporation (GHLC, Jūtaku Kin’yū Kōko), a government agency whose purpose was toprovide long-term fixed- and low-interest rate loans to households wishing to purchase or
construct housing, in 1950. In the early postwar years, the GHLC was the primary source of
housing loans, but private financial institutions began offering housing loans in the 1970s and1980s. Moreover, in 1994, the Ministry of Finance liberalized the housing loan market andallowed private financial institutions to freely set the terms and interest rates of housing loans.
This led to intense competition among private financial institutions for housing loans.
As a result of growing concern that GHLC loans would crowd out private housing credit, it
was decided in 2001 that the GHLC would be abolished as part of the reform of special public
corporations, and in 2003, a law governing the restructuring of the GHLC was passed thatprovided for the abolition of the GHLC in 2007 and its replacement by the newly created Japan
Housing Finance Agency (JHF, Jūtaku Kin’yū Shien Kikō). At the same time, it was decided
that the GHLC would scale back its provision of housing loans and shift its focus to securitizing
and guaranteeing private-sector housing loans. The GHLC started its securitization operationsin 2003, and these operations were taken over by the JHF following the abolition of the GHLC
in 2007.
Thus, whereas the primary role of the GHLC was to provide housing loans directly tohouseholds, the JHF’s primary role is to help private financial institutions to provide housing
loans by securitizing and guaranteeing a type of long-term fixed-rate housing loan offered byprivate financial institutions called Flat 35. More specifically, the JHF purchases such housing
loans from private financial institutions, issues mortgage-backed securities, and guarantees thatinvestors in these securities will receive payment of the principal and interest on schedule. The
government decided to assume the role of securitizing and guaranteeing private housing loans
because, although the securitization of housing loans started in 1999, the securitization market
for private label securities was too small to replace GHLC lending.
6

The end result of these reforms is that the housing finance system was greatly liberalized withthe role of private sector expanding relative to that of the government sector and with the
choices available to households broadening to include not only fixed-rate loans but alsovariable-rate loans. Figure 2, for example, shows the shares of various types of housing loans
in the case of new lending during the 2001-2016 period. One of the most noticeable trends inthis figure is a significant increase in the share of variable-rate loans since the mid-2000s. Its
share was only about 23 percent in 2001 but increased to about 50 percent in 2016. By contrast,
the share of elective period fixed-rate loans, a hybrid product whose interest rate is fixed for a
pre-determined number of years before becoming variable, declined sharply during this period.
Note that, as of 2016, the most common form of elective period fixed-rate loans was fixed-rateloans for the 10-year period (about 49% of all elective period fixed-rate loans).6
Figure 2 here
These reforms of the housing finance system increased the choices available to homebuyers,
and in conjunction with the low interest rates that have prevailed in recent years, they made iteasier and more affordable to take out housing loans (see Kobayashi (2016) and Yamori andKondo (2008) for more details).
4.4. Summary
In sum, all three factors have played some role in encouraging households to purchase housing
and to finance their purchases using housing loans and in enabling them to do so at an earlier
age since 2000. Nevertheless, a rigorous analysis is certainly needed to determine thecontribution of each of these factors to the recent increase in debt holding among young
households.
5. Do We Need to Be Concerned?
One of the questions that arise from recent trends in the borrowing behavior of young
households is whether or not we need to be concerned about their implications for theirretirement security. If the recent trend merely reflects the fact that households are purchasing
houses at an earlier stage in their life cycles, we may not need to be overly concerned. However,as we saw earlier, the 1971-80 cohort seems to be relying more on housing loans for housingpurchases than older cohorts, and the debt-to-income ratio in the 30-39 age group for the 197180 cohort increased significantly relative to those for older cohorts. If the debt-to-income ratio
in the 40-49 age group for the 1971-80 cohort remains relatively high in 2020, we may need tomonitor closely their loan repayment patterns as they approach retirement age.
Another cause for concern is the fact that it has become increasingly more common to take out
variable-rate housing loans over the last few decades (see Figure 2). As long as interest rates
are kept low, this should not be a major concern. Nevertheless, if and when the Bank of Japannormalizes its monetary policy, this will certainly affect households’ loan repayment capacity.
Given that interest rates have been kept low for so long in Japan, some households may not be
fully aware of the risk associated with variable-rate loans.
Figure 3 here
Figure 4 here
7

Figure 3, for example, shows that about 12 percent of those who have taken out variable-rate
housing loans do not seem to understand the implications of interest rate increases for loan
repayment amounts. In addition, about 37 percent of them are worried about whether or notthey understand this risk sufficiently. This suggests that Japan may see a group of households
who encounter difficulties in repaying their housing loans if and when interest rates are
increased. It is indeed worrying to find that about one-fifth of those who have taken out
variable-rate housing loans do not seem to have thought through possible ways of responding
to the increase in the loan repayment amount that will occur if and when interest rates are
increased (see Figure 4).
Thanks to a number of government policies that have been implemented to promote housingpurchases over the last few decades, households have more choices for housing loans and theseloans seem to have become more affordable. However, given that the level of understanding of
the risks associated with the type of housing loan they chose appears to be relatively low formany households, the recent increase in debt holdings among young households raises someconcerns about their retirement security 20 to 30 years from now, particularly if the Bank ofJapan normalizes its monetary policy in the future.
Thus, as in the case of the US, the low level of financial literacy, especially with respect to thecomplexities of housing loans, seems to be a serious problem in Japan and needs to be urgently
rectified (see Sekita (2011) for an analysis of financial literacy and of the impact of financial
literacy on asset and debt management and retirement security in Japan and Clark and Liu(2020) and Lusardi et al. (2020) for similar analyses for the US).
6. Conclusion
In this paper, we analyzed the borrowing behavior of Japanese households in comparison tothe other G7 countries and also broken down by the age group of the household head. We foundthat pre-retirement households (households with a head in the 50-59 age group) in Japan do nothave inordinate amounts of debt and that their financial health is satisfactory. However, we also
found that households with a head in the 30-39 age group have shown a sharp increase in debt
holdings in recent years, due largely to the fact that tax breaks for housing purchase, reforms
in the housing loan market since the early 2000s, and expansionary monetary policy enabled
Japanese households to purchase housing at a younger age than they could previously. We
therefore need to monitor the borrowing behavior of this cohort over time as the Bank of Japannormalizes its monetary policy, especially since households have become more vulnerable torising interest rates as the share of households who have chosen variable-rate housing loans has
increased in recent years. Moreover, there is an urgent need to raise the financial literacy ofthis cohort, especially with respect to the complexities of housing loans, so that it is able tomanage its assets and debt properly as it approaches its retirement years.
Turning finally to directions for further research, we have looked only at average figures foreach age group but studies for the US find enormous heterogeneity by gender, marital status,
ethnicity, income, educational attainment, and other demographic characteristics (e.g., Lusardi
et al. 2018b, 2020, and forthcoming; Brown et al. 2020a; Brown et al. 2020b; and Clark andLiu 2020). An important direction for further research is to take account of heterogeneity in thecase of Japan as well.

8References
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A Cohort Analysis,’ in O. S. Mitchell and A. Lusardi, eds., Remaking Retirement: Debt in an
Aging Economy. Oxford, UK: Oxford University Press.
Brown, M., D. Lee, J. Scally, and W. van der Klaauw (2020b). ‘The Graying of American Debt,’
in O. S. Mitchell and A. Lusardi, eds., Remaking Retirement: Debt in an Aging Economy.
Oxford, UK: Oxford University Press.
Clark, R. L. and S. Liu (2020). ‘Financial Well-being of State and Local Government Retirees
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Aging Economy. Oxford, UK: Oxford University Press.
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Economy, 39(4): 109-124.
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9

Table 1. International comparison of the ratio of household liabilities to income (%)
1980
1985
1990
1995
2000
2005
2010
2015
2016
Change, 1980-1990
Change, 1990-2000
Change, 2000-2010
Change, 2010-2016
Change, 1980-2016

Canada
87
76
93
103
113
132
161
167
172

France
62
63
79
66
69
87
113
115
118

Germany
15
17
70
97
116
108
98
93
93

Italy
8
9
29
32
55
59
77
75
74

Japan
77
89
132
130
134
134
116
111
113

UK
57
86
116
106
118
154
155
141
146

US
77
88
87
93
100
130
124
105
106

6
20
48
11
85

17
-10
44
5
56

55
46
-18
-5
78

21
26
22
-3
66

55
2
-28
7
36

59
2
37
-9
89

10
13
24
-18
29

Note: “Change” indicates changes in percentage points during the indicated period.
Source: Organisation for Economic Co-operation and Development (OECD), OECD Economic
Outlook, various issues (available at https://www.oecd-ilibrary.org/economics/oecd-economicoutlook_16097408)

10

Table 2. International comparison of the ratio of household liabilities to assets (%)
1980
1985
1990
1995
2000
2005
2010
2015
2016
Change, 1980-1990
Change, 1990-2000
Change, 2000-2010
Change, 2010-2016
Change, 1980-2016

Canada
17.68
15.93
18.24
17.83
18.37
16.48
18.57
16.94
16.54

France
13.30
14.02
12.68
12.42
10.88
10.48
12.54
12.38
12.41

Germany
na
na
11.56
16.34
17.66
15.56
13.54
12.08
na

Italy
1.58
2.75
4.37
4.31
6.75
6.36
7.68
7.46
7.47

Japan
13.25
13.65
12.24
15.03
15.33
14.03
11.58
11.31
11.55

UK
11.70
14.87
15.93
15.75
13.27
17.30
18.28
15.68
15.22

US
13.18
14.33
15.43
15.49
14.47
16.37
17.92
13.89
13.62

0.55
0.14
0.20
-2.03
-1.14

-0.62
-1.80
1.66
-0.13
-0.90

na
6.10
-4.12
na
na

2.79
2.38
0.93
-0.20
5.89

-1.02
3.09
-3.75
-0.03
-1.70

4.23
-2.66
5.00
-3.05
3.52

2.25
-0.96
3.45
-4.29
0.44

Note: “Change” indicates changes in percentage points during the indicated period. “na”
indicates “not available.”
Source: Organisation for Economic Co-operation and Development (OECD), OECD Economic
Outlook, various issues (available at https://www.oecd-ilibrary.org/economics/oecd-economicoutlook_16097408)

11

Table 3. The proportion of households holding debt by age group in Japan (%)
29 oryounger
46.25
52.18
42.99
46.84
41.12
38.02
39.52
36.57
37.52
39.23
43.61
43.05
40.94
43.85

30-39

40-49

50-59

60-69

1980
1985
1990
1995
2000
2005
2010
2011
2012
2013
2014
2015
2016
2017

All
ages
49.90
51.90
48.21
46.92
43.04
40.84
39.96
38.25
38.86
38.67
37.76
38.07
37.33
37.50

54.05
57.07
51.56
52.16
50.62
53.16
55.63
56.00
56.55
58.20
56.70
54.18
60.54
61.68

57.08
61.04
60.19
60.62
64.71
60.55
62.76
59.89
64.49
61.83
62.25
64.59
62.77
64.77

48.24
54.66
55.21
54.00
53.40
49.82
52.13
52.93
51.88
54.95
53.09
54.58
52.93
53.20

29.83
27.88
25.02
26.32
20.64
26.12
24.86
24.97
27.04
25.24
26.13
27.08
27.14
26.26

70 or
older
na
na
na
na
na
15.87
15.03
12.27
12.50
12.83
11.79
12.40
11.20
11.45

Change, 1980-1990
Change, 1990-2000
Change, 2000-2010
Change, 2010-2017
Change, 1980-2017

-1.69
-5.17
-3.08
-2.46
-12.40

-3.26
-1.87
-1.59
4.33
-2.39

-2.49
-0.94
5.01
6.05
7.62

3.10
4.52
-1.95
2.01
7.69

6.97
-1.81
-1.26
1.07
4.96

-4.81
-4.39
4.23
1.40
-3.57

na
na
na
-3.59
na

Note: “Change” indicates changes in percentage points during the indicated period. “na”
indicates “not available.” The figures in the 60-69 column for 1980-2000 represent figures for
60 or older.
Source: Authors’ computations based on data on two-or-more-person households from theFamily Savings Survey (FSS) for the 1980-2000 period and from the Family Income andExpenditure Survey (FIES) for the 2005-2017 period. The FSS data were taken from Statistics
Bureau, Ministry of Internal Affairs and Communications (available at https://www.estat.go.jp/stat-search/files?page=1&toukei=00200563), while the FIES data were taken from
Statistics Bureau, Ministry of Internal Affairs and Communications (available athttps://www.stat.go.jp/data/sav/np.html).

12

Table 4. The ratio of household liabilities to income by age group in Japan (%)
29 oryounger
25.20
39.54
23.63
72.21
50.64
69.33
70.42
70.20
66.29
71.61
122.64102.50111.29119.80

30-39

40-49

50-59

60-69

1980
1985
1990
1995
2000
2005
2010
2011
2012
2013
2014
2015
2016
2017

All
ages
38.16
48.97
53.03
60.37
74.62
77.67
79.38
75.49
77.39
81.01
82.90
81.01
82.57
83.79

47.60
61.32
62.61
78.49
97.45
128.36149.56147.72160.32
171.36166.39165.31
188.45
196.57

42.38
59.88
68.47
73.45
111.91112.55129.30119.32
137.17133.60144.17145.50142.84138.45

31.11
40.73
45.65
58.81
72.22
71.38
69.22
69.48
65.69
75.31
79.85
78.47
69.86
73.37

25.57
28.79
33.82
37.28
39.03
40.14
39.32
40.43
35.30
35.36
37.43
34.21
39.01
35.22

70 or
older
na
na
na
na
na
34.86
23.68
19.31
21.33
20.90
17.07
18.49
20.41
27.82

Change, 1980-1990
Change, 1990-2000
Change, 2000-2010
Change, 2010-2017
Change, 1980-2017

14.87
21.58
4.77
4.41
45.63

-1.57
27.01
19.78
49.38
94.60

15.01
34.84
52.12
47.00
148.97

26.09
43.44
17.39
9.15
96.07

14.54
26.57
-3.00
4.14
42.25

8.25
5.22
0.29
-4.10
9.66

na
na
na
4.13
na

Note: “Change” indicates changes in percentage points during the indicated period. “na”
indicates “not available.” The figures in the 60-69 column for 1980-2000 represent figures for
60 or older.
Source: Same as Table 3.
Table 5. The proportion of households holding debt by cohort in Japan (%)
29 oryounger
Born in 1941-50
Born in 1951-60
Born in 1961-70
Born in 1971-80

46.25
42.99
41.12

30-39
54.05
51.56
50.62
55.63

Source: Same as Table 3.

13

40-49
60.19
64.71
62.76

50-59
53.40
52.13

60-69
24.86

Table 6. The ratio of household liabilities to income by cohort in Japan (%)
29 oryounger
Born in 1941-50
Born in 1951-60
Born in 1961-70
Born in 1971-80

30-39
47.60
62.61
97.45
149.56

25.20
23.63
50.64

40-49

50-59

68.47
111.91129.30

60-69

72.22
69.22

39.32

Source: Same as Table 3.
Table 7. The share of household housing loans in total loans by age group in Japan (%)
30-39

40-49

50-59

60-69

1980
1985
1990
1995
2000
2005
2010
2011
2012
2013
2014
2015
2016
2017

All
29 or
ages
younger
80.98
74.90
80.67
72.85
87.61
68.22
87.71
88.02
86.05
77.80
86.63
87.23
88.14
88.09
88.53
87.78
89.77
89.42
89.78
89.19
89.98
92.11
89.38
91.67
89.15
92.44
89.56
94.27

83.43
90.20
90.64
91.26
88.83
93.86
94.98
94.77
94.94
94.36
94.77
95.47
94.96
94.10

84.39
82.31
88.43
86.50
89.56
90.14
92.02
93.23
93.35
92.86
92.77
93.07
93.03
93.65

77.10
80.97
87.41
86.99
84.91
81.07
82.03
84.57
86.19
86.66
85.32
83.10
82.91
87.52

67.98
48.76
82.37
87.42
77.99
75.89
76.92
75.22
77.66
80.88
83.57
80.61
82.73
79.02

70 or
older
na
na
na
na
na
82.04
76.85
75.56
75.00
75.27
75.64
75.90
68.89
71.07

Change, 1980-1990
Change, 1990-2000
Change, 2000-2010
Change, 2010-2017
Change, 2000-2017

6.63
-1.57
2.09
1.42
8.57

7.21
-1.81
6.15
-0.88
10.67

4.05
1.12
2.46
1.63
9.26

10.32
-2.50
-2.88
5.49
10.42

14.39
-4.38
-1.07
2.10
11.05

na
na
na
-5.78
na

-6.68
9.58
10.29
6.18
19.37

Note: “Change” indicates changes in percentage points during the indicated period. “na”
indicates “not available.” The figures in the 60-69 column for 1980-2000 represent figures for
60 or older.
Source: Same as Table 3.

14

Table 8. The share of housing loans in total loans by cohort in Japan (%)
29 oryounger
Born in 1941-50
Born in 1951-60
Born in 1961-70
Born in 1971-80

30-39

40-49

83.43
90.64
88.83
94.98

74.90
68.22
77.80

50-59

88.43
89.56
92.02

60-69

84.91
82.03

76.92

Source: Same as Table 3.
Table 9. Homeownership rates by age group in Japan (%)

1980
1985
1990
1995
2000
2005
2010
2011
2012
2013
2014
2015
2016
2017
Change, 1980-1990
Change, 1990-2000
Change, 2000-2010
Change, 2010-2017
Change, 1980-2017

All
ages
67.3
71.8
73.4
71.6
75.6
77.9
79.8
79.0
81.5
83.3
83.5
83.4
84.9
85.9

29 or
younger
22.9
26.8
27.3
19.1
22.6
19.9
23.1
21.3
17.6
20.8
30.4
27.5
30.0
32.1

30-39

40-49

50-59

60-69

52.4
51.0
45.5
40.4
44.9
47.7
52.6
54.4
53.9
60.1
56.6
58.4
59.9
62.3

71.8
76.6
75.8
69.8
75.7
73.8
74.2
71.9
76.6
76.3
74.8
77.2
76.6
79.4

84.9
87.3
84.4
82.4
83.5
85.7
84.6
83.9
85.3
87.2
86.5
85.2
86.8
87.4

85.5
83.6
87.8
87.6
89.3
90.5
91.4
90.9
91.7
91.6
94.0
91.6
93.3
93.3

70 or
older
na
na
na
na
na
91.0
91.6
88.6
91.9
93.5
93.9
93.0
94.8
94.8

6.1
2.2
4.2
6.1
18.6

4.4
-4.7
0.5
9.0
9.2

-6.9
-0.5
7.7
9.7
9.9

3.9
-0.1
-1.5
5.2
7.6

-0.5
-0.9
1.1
2.8
2.5

2.2
1.5
2.1
1.9
7.8

na
na
na
3.2
na

Note: “Change” indicates changes in percentage points during the indicated period. “na”
indicates “not available.” The figures in the 60-69 column for 1980-2000 represent figures for
60 or older.
Source: Same as Table 3.

15

Table 10. Homeownership rates by cohort in Japan (%)
29 oryounger
Born in 1941-50
Born in 1951-60
Born in 1961-70
Born in 1971-80

30-39
52.4
45.5
44.9
52.6

22.9
27.3
22.6

Source: Same as Table 3.

16

40-49
75.8
75.7
74.2

50-59
83.5
84.6

60-69
91.4

Figure 1. The annual real rate of change of Japanese residential land prices (%)
30
25
20
15
10
5
0
-5
-10
-15

Note: The figures show the annual real rate of change of Appraised Land Prices (Chika Kōji)
for residential land nationwide. Nominal rates of change were converted to real rates of change
by subtracting the annual rate of change of the Consumer Price Index.
Source: For land price data, Ministry of Land, Infrastructure, Transport and Tourism (available
at http://www.mlit.go.jp/totikensangyo/totikensangyo_fr4_000251.html). For Consumer Price
Index data, Statistics Bureau, Ministry of Internal Affairs and Communications (available athttps://www.e-stat.go.jp/statsearch/files?page=1&layout=datalist&toukei=00200573&tstat=000001084976&cycle=0&tcl
ass1=000001085995&tclass2=000001085936&tclass3=000001085996&tclass4=0000010859
9717Figure 2. The share of various types of housing loans in new lending, Japan, 2001-2016
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Whole period fixed-rate loans

Securitized loans (Flat 35)

Elective period fixed-rate loans

Variable-rate loans

Source: Housing Bureau, Ministry of Land, Infrastructure, Transport and Tourism, Results
Report on the Survey on the Status of Private Housing Loans (Minkan Jūtaku Ron no Jittai
nikansuru Chōsa: Kekka Hōkokusho), various years (available at https://www.e-stat.go.jp/statsearch/files?page=1&toukei=00600670&tstat=000001016940)
Figure 3. Understanding about the impact of possible interest rate increases on the loan
repayment amount, Japan, 2018

0%

10%

20%

30%

40%

50%

Fully understandWorried about whether I understand sufficiently
Do not understand at all

60%

70%

80%

90%

100%

More or less understandDo not understand well

Note: The figures are for those who have taken out variable-rate loans.
Source: Japan Housing Finance Agency (Jūtaku Kin’yū Shien Kikō) (2019). 2018 Survey on
the Status of Private Housing Loan Users (2018 nendo Minkan Jūtaku Ron Riyōsha no Jittai
Chōsa) (available at https://www.jhf.go.jp/about/research/loan_user.html#data01).

18

Figure 4. Planned response to an increase in the loan repayment amount in the event of interest
rate increases, Japan, 2018

0%

10%

20%

30%

40%

50%

60%

70%

Continue repaying as I have the financial capacity to do so
Repay fully if the interest burden becomes too large
Repay part of the loan early to reduce the interest burden
Refinancing
No idea
OthersNote: The figures are for those who have taken out variable-rate loans.
Source: Same as Figure 3.

19

80%

90%

100%

Endnotes
1

These figures are taken from the 2019 Population Statistics, provided by the National Institute ofPopulation
andSocialSecurity
Research(availableat
http://www.ipss.go.jp/syoushika/tohkei/Popular/Popular2019.asp?chap=0).

2

See Lusardi et al. (forthcoming) for a useful review of the literature on possible reasons for the rapid
increase in debt holdings in the US.

3

These figures are based on data on two-or-more-person households from Statistics Bureau, Ministryof Internal Affairs and Communications, Annual Report on the Family Income and Expenditure Survey,
Volume II: Savings and Liabilities, 2017 edition (http://www.stat.go.jp/data/sav/2017np/index.html).

4

Income here refers to household net disposable income, which is defined as the sum of household
final consumption expenditure and saving minus the change in net equity of households in pension
funds. This indicator corresponds to the sum of wages and salaries, mixed income, net property income,net current transfers, and social benefits other than social transfers in kind, less taxes on income andsocial wealth and social security contributions paid by employees, the self-employed and theunemployed (https://data.oecd.org/hha/household-disposable-income.htm).

5

Horioka (2012) provides earlier data for Japan, which show that the upward trend in debt levels inJapan started as early as 1955.

6

Housing Bureau, Ministry of Land, Infrastructure, Transport and Tourism (2018). 2017 Results Reporton the Survey on the Status of Private Housing Loans (Minkan Jūtaku Ro-n no Jittai nikansuru Chōsa:
Kekka
Hōkokusho)(available
athttps://www.e-stat.go.jp/statsearch/files?page=1&toukei=00600670&tstat=000001016940).

20