Reamonn Lydon & Tara McIndoe-Calder Central Bank of Ireland CBI. NERI, 22 April 2015

Transcription

1 The Household Finance and Consumption Survey The Financial Position of Irish Households Reamonn Lydon & Tara McIndoe-Calder Central Bank of Ireland CBI NERI, 22 April 2015

2 Disclaimer Any views expressed here are my own. The opinions expressed in this paper are those of the authors and do not necessarily represent the views of the Central Bank of Ireland or the ESCB. R. Lydon NERI, April 2015 HFCS survey 2 / 36

3 Presentation outline 1. Background to HFCS 2. Households balance sheets in 2013 The impact of the crisis The role of housing and debt Debt burden 3. Comparisons with other Euro area countries 4. Net wealth over time R. Lydon NERI, April 2015 HFCS survey 3 / 36

4 1. Background to the HFCS QFAs show aggregate impact of crisis on income and wealth Limited information at the household level HFCS 2013 fills this information gap Household-level data on assets, debt and net wealth The impact of policy on debt repayment burdens Access to credit and credit constraints Consumption smoothing and portfolio selection Wealth distribution and the impact of macro-economic shocks CBI Quarterly Bulletin Article to accompany the release R. Lydon NERI, April 2015 HFCS survey 4 / 36

5 Survey Overview HFCS fieldwork March - Sep ,419 households 14,546 individuals Real assets, Financial assets, Liabilities, Credit constraints, Inheritance & gifts, Non-labour income, Consumption & saving Demographics, Employment, Future pension entitlements, Labour related income NB: Use of administrative sources to verify data R. Lydon NERI, April 2015 HFCS survey 5 / 36

6 Comparisons between HFCS and other data (preliminary) HFCS Agg. data Source Other source Total debt (ebn) e119.8 e117.2 CBI, M&B Housing assets (ebn) e317.9 e331.0 CBI QFA Deposits + savings (ebn) e33.3 e86.3 CBI Food spend (e/month/hhld) e682.2 e655.3 CSO, NIE Non-dur s & services a (e/month/hhld) e2,527.3 e2,597.2 CSO, NIE Income (gross equivalised) e e CSO, SILC Gini coefficient (net income) CSO, SILC Gini coefficient (gross income) CSO, SILC (a) Imputed, following Browning et al R. Lydon NERI, April 2015 HFCS survey 6 / 36

7 2. Households balance sheets in 2013 R. Lydon NERI, April 2015 HFCS survey 7 / 36

8 Big picture composition of net wealth by age , '000s Average values within age cohort % of 24% of 22% of 18% of 15% of 13% of hhlds -200 hhlds hhlds hhlds hhlds hhlds -200 Age- <= group Other debt Mortgage on HMR Financial assets Other real assets Other property assets HMR assets (the home you live in) Total net wealth R. Lydon NERI, April 2015 HFCS survey 8 /

9 Participation in real & financial assets, by income decile Other res Other nonres prop Assets Assets Assets Other Real Any Financial Other Financial Any real assets HMR Deposits prop % households % Euro area Fraction of Households Having Asset Decile of Gross Income Household main res. Other non-residential property Deposits Other residential property Other Real Assets Other financial assets R. Lydon NERI, April 2015 HFCS survey 9 / 36

10 Median values & composition of assets, by income quintile Any assets HMR Other res prop Other non-res prop Deposits Other Financial Assets Conditional on participation Median value ( 000s), Ireland Median value ( 000s), Euro area { } Fraction of value of total assets Income quintile HMR Deposits Other real assets Other Fin Assets R. Lydon NERI, April 2015 HFCS survey 10 / 36

11 Composition of assets, by wealth quintile Fraction of value of total assets Median Net Income 30.8k 30.4k 33.6k 37.7k 52.0k HMR Deposits Other real assets Other Fin Assets R. Lydon NERI, April 2015 HFCS survey 11 / 36

12 Participation in debt, by income decile Participation in debt Any debt HMR Mort Non-HMR Residential Mort Other prop mort Non-mort debt % Irish households % Euro area households { 5.6 } 29.3 Fraction of Households Having Debt Decile of Gross Income Total debt Other Mortgages HMR Mortgage Non-collateralised debt R. Lydon NERI, April 2015 HFCS survey 12 / 36

13 Participation in debt, by age cohort Fraction of Households Having Debt Age of reference person (years) Total debt Other Mortgages HMR Mortgage Non-collateralised debt R. Lydon NERI, April 2015 HFCS survey 13 / 36

14 Median values & composition of debt, by income decile Any debt HMR Mort Non-HMR Residential Mort Other prop mort Non-mort debt Median value (, 000s), Ireland Median value (, 000s), Euro area { 56.8 } 5.0 Fraction of value of total debt/ % with debt HMR Non-HMR Mortgage Non-Collateralised Households with any debt (%) R. Lydon NERI, April 2015 HFCS survey 14 / 36

15 Debt burden High levels of debt participation and outstanding amounts of Irish households relative to the Euro Area. Examine debt service across the age distribution. Does debt taken out by different groups varies by their income and asset positions? Allows us to gauge the debt burden. Unless otherwise stated, charts relating to debt or debt-service are conditional on having some form of debt. Some metrics use net income this is not a HFCS variable: our estimate compares favourably with Revenue distributions. R. Lydon NERI, April 2015 HFCS survey 15 / 36

16 Debt to net income (any debt), by age cohort Debt-to-net-income-ratio Age (5-year bands) 25th_percentile 75th_percentile Median_percentile R. Lydon NERI, April 2015 HFCS survey 16 / 36

17 Property debt-service to net income ratio (conditional on debt) R. Lydon NERI, April 2015 HFCS survey 17 / 36

18 Distribution of debt-service-to-income ratio, by gross income quintile Fraction of Hhlds with D-S ratio > threshold Q1 Q3 Q5 Q2 Q Debt-service ratio R. Lydon NERI, April 2015 HFCS survey 18 / 36

19 Ratio of outstanding HMR debt to value (conditional on having an HMR mortgage) Loan_to_value_ratio Age (5-year bands) 25th_percentile 75th_percentile Median_percentile R. Lydon NERI, April 2015 HFCS survey 19 / 36

20 3. Comparisons with other Euro Area (EA countries Irish households more likely to own their home... have fewer financial assets... are more indebted... income and wealth distributions very similar to EA But! Keep in mind that they also tend to be younger: 18% retired versus 32%... in workless households: 28% versus 11% R. Lydon NERI, April 2015 HFCS survey 20 / 36

21 70.5% of Irish households have a HMR asset, versus 60.1% in Euro area Germany (2010) Austria (2010) France (2010) Netherlands (2009) Euro area (wave 1) Luxembourg (2010) Finland (2009) Italy (2010) Belgium (2010) Ireland (2013) Portugal (2010) Greece (2009) Cyprus (2010) Malta (2010) Slovenia (2010) Spain (2008) Slovakia (2010) Percentage of households with a HMR asset R. Lydon NERI, April 2015 HFCS survey 21 / 36

22 Gini coefficient Wealth inequality is negatively correlated with home-ownership Gini coefficient for NET WEALTH and home ownership 0.8 DE AT 0.7 FR NL ALL FI LU IRL PT CY 0.6 IT BE GR MT SI ES 0.5 SK Home ownership (per cent) R. Lydon NERI, April 2015 HFCS survey 22 / 36

23 Lower participation rates in financial assets in Ireland Financial assets account for just 13% of gross assets Participation in financial assets Ireland (2013) Euro Area (wave 1) Any fin assets Deposits Bonds or mutual funds Shares Voluntary pension Other financial assets R. Lydon NERI, April 2015 HFCS survey 23 / 36

24 Net liquid assets to gross income ratio: Euro area comparison Slovenia (2010) Greece (2009) Cyprus (2010) Ireland (2013) Finland (2009) Slovakia (2010) Spain (2008) Portugal (2010) Netherlands (2009) France (2010) Euro Area (wave 1) Luxembourg (2010) Italy (2010) Germany (2010) Austria (2010) Belgium (2010) Malta (2010) Net liquid assets/income R. Lydon NERI, April 2015 HFCS survey 24 / 36

25 Debt-to-assets: Ireland -v- EA Slovenia (2010) Malta (2010) Slovakia (2010) Italy (2010) Greece (2009) Austria (2010) Cyprus (2010) Spain (2008) Belgium (2010) Luxembourg (2010) France (2010) Euro Area (wave 1) Portugal (2010) Germany (2010) Finland (2009) Ireland (2013) Netherlands (2009) Debt to asset ratio R. Lydon NERI, April 2015 HFCS survey 25 / 36

26 Debt-to-gross income: Ireland -v- EA Slovakia (2010) Slovenia (2010) Austria (2010) Germany (2010) Greece (2009) Italy (2010) France (2010) Malta (2010) Euro Area (wave 1) Finland (2009) Belgium (2010) Luxembourg (2010) Ireland (2013) Spain (2008) Portugal (2010) Cyprus (2010) Netherlands (2009) Debt to income ratio R. Lydon NERI, April 2015 HFCS survey 26 / 36

27 Mortgage-service to gross income ratio: Euro area comparison Finland (2009) Austria (2010) Slovenia (2010) Germany (2010) Malta (2010) Netherlands (2009) Belgium (2010) Italy (2010) Ireland (2013) Euro Area (wave 1) Luxembourg (2010) Greece (2009) Portugal (2010) France (2010) Slovakia (2010) Spain (2008) Cyprus (2010) Mortgage service to income ratio R. Lydon NERI, April 2015 HFCS survey 27 / 36

28 Net wealth distribution (gini coefficient 0.64) Cumulative share of net wealth Cumulative share of households Net wealth (Ireland) Net wealth (EA) Net wealth (US) Median net wealth values: Ireland e105k, Euro area e109k R. Lydon NERI, April 2015 HFCS survey 28 / 36

29 Income distribution Cumulative share of income Cumulative share of households Income (Ireland) Income (EA) Income (US) R. Lydon NERI, April 2015 HFCS survey 29 / 36

30 Net wealth and gross income correlation, by age R. Lydon NERI, April 2015 HFCS survey 30 / 36

31 3. Net wealth over time R. Lydon NERI, April 2015 HFCS survey 31 / 36

32 Net wealth gini Gini coefficient for net wealth: R. Lydon NERI, April 2015 HFCS survey 32 / 36

33 Net wealth 1987 v (2) 1987 distribution from Nolan (CBA, 1991) similar meth. to HFCS Nolan (1987) HFCS (2013) Lorenze curves net wealth Share of wealth in Bottom 50% 12.2% 4.5% Bottom 70% 28.5% 17.1% Top 30% 71.5% 82.9% Top 10% 42.3% 53.0% Top 5% 29.0% 36.0% Top 1% 10.0% 12.1% Gini: 1987 = 52, 2013 = 64 R. Lydon NERI, April 2015 HFCS survey 33 / 36

34 What drove this shift in the distribution of wealth? Need to look at the composition of assets HFCS 2013 Bottom 70% Next 20% Top 10% Top 1% All HMR 74% 64% 25% 14% 46% Other resi property 5% 6% 9% 9% 7% Other non-resi property 4% 15% 48% 49% 29% Financial assets 17% 15% 19% 28% 17% 100% 100% 100% 100% 100% Nolan 1987 HMR 88% 67% 31% 20% 59% Other resi property 2% 4% 7% 9% 4% Other non-resi property 4% 20% 52% 60% 28% Financial assets 7% 9% 10% 11% 9% 100% 100% 100% 100% 100% So, property prices are large part but not all of the story. R. Lydon NERI, April 2015 HFCS survey 34 / 36

35 Increasing indebtedness also a factor... Because we are looking at net wealth, must also take account of increasing indebtedness Ratio of HMR debt-to-gross income Top 25%... Bottom 75% R. Lydon NERI, April 2015 HFCS survey 35 / 36

36 Conclusions what s next? New data set, still a lot to understand e.g. financial assets? Several ongoing research projects involving the use of micro-simulation to better understand macro outcomes such as household spending, amongst other things. Much work to be done in order to build a robust (& credible) simulated dataset. Comments & suggestions are very welcome at this stage Thank you R. Lydon NERI, April 2015 HFCS survey 36 / 36