FY2026 Report: Challenges of a Full-Scale Shift to a Growth-Oriented Economy | Chapter 3Economic Structural Change and Household Impact
Overview
As the economy shifts toward one in which wages, prices, and interest rates rise, the impact on households varies by assets and liabilities, age, income, and region. While households holding equities and older households may benefit from rising asset prices and interest rates, households with mortgages, residents of rural areas, and low-income groups are more likely to face greater burdens. It is necessary to assess prices, interest rates, and wages together with asset ownership.
Key points
- The economy is shifting from a low-temperature economy to one in which wages, prices, and interest rates are moving.
- The impact on households varies according to the structure of asset and liability ownership.
- Households with mortgages, residents of rural areas, and low-income groups are more likely to face greater burdens.
- Analysis that includes financial assets and liabilities, rather than income alone, is important.
Overview
Japan's economy is shifting from a state in which wages and prices were low and showed little fluctuation to an environment in which both are rising gradually while responding to each other, and market interest rates are also trending upward.
Household assets and liabilities and consumption structures differ by age, income, mortgage status, and region, making it difficult to capture differences in impact through averages alone.
Key figures
- Short-term interest rate level (June 2026)
- approximately 1%
- Long-term interest rate level (June 2026)
- approximately in the mid-2% range
- Household financial assets (end of fiscal 2025)
- approximately 2,400 trillion yen
- Equity and investment trust holdings (fiscal 2025)
- 564 trillion yen
- Share of variable-rate mortgages (end of fiscal 2024)
- approximately 70%
- Interest rate increase assumption for simulation (debt)
- 1 percentage point
- Interest rate increase assumption for simulation (deposits and other assets)
- 0.6 percentage points
- Crude oil price increase assumption for simulation
- approximately 50%
Impact
When interest rates rise, interest income increases for households holding deposits and similar assets, while interest payments increase for households with mortgages, with working-age households particularly likely to face a greater burden.
The benefits of rising stock prices are concentrated among households holding equities and investment trusts, while older households without mortgages and high-income households are more likely to see their financial assets increase.
The household burden from rising crude oil prices is relatively greater in rural areas, where gasoline spending accounts for a larger share, and among low-income groups, where energy spending accounts for a larger share.
Details
The analysis uses the Bank of Japan's Flow of Funds Accounts, the Ministry of Internal Affairs and Communications' Consumer Price Index and National Survey of Family Income, Consumption and Wealth, and surveys by the Japan Financial and Economic Education Promotion Agency, among other sources, to examine trends in assets and liabilities and differences by household attributes.
For rising interest rates, rising stock prices, and rising crude oil prices, mechanical simulations are conducted based on household assets and liabilities and consumption baskets, and impacts are compared by age, income, mortgage status, and urban class.
The analysis concludes that, when evaluating changes in prices, interest rates, and wages, it is important to assess not only wage income but also holdings of cash and deposits, risky assets, and mortgages.
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