Less wealthy households, in particular, are recording increases in their current and savings account balances. According to the Bundesbank’s Monthly Report, the holdings of current and savings accounts of households in the less wealthy 20% of the distribution have increased significantly. Household debt among that group has also fallen slightly on average. The household saving ratio increased during the coronavirus pandemic especially, as consumption opportunities were limited at that time. Only one-fifth of households reported that they had lost wages and income due to the pandemic. 

Inequality declines slightly

The Bundesbank’s economists also investigated wealth inequality in Germany. Per their findings in the report, net wealth inequality also decreased slightly between 2017 and 2021. By European standards, however, net wealth remained unevenly distributed. One way in which this can be seen is in the share of total net wealth belonging to the wealthiest 10% of households in Germany. This encompasses households whose net wealth totalled at least €725,900 in 2021. In 2021, this group possessed around 56% of total net wealth in Germany (2017: 55%).

Marked regional differences remain 

The Bundesbank’s economists also examined whether characteristics such as the region in which a household lives as well as the age and marital and family status of the reference person can give any indication as to whether a household is wealthy or not. In the process, they discovered that net wealth in eastern Germany is far lower than in western Germany, even decades after reunification. The median wealth of a household in eastern Germany stood at €43,400 in 2021, compared to €127,900 in western Germany. However, median wealth in eastern Germany has risen relatively more strongly than in western Germany than was the case in the previous survey, according to the Monthly Report.

Age is also a relevant factor. Typically, an individual’s wealth grows up to a certain age and then decreases again. According to the study, households with persons under the age of 25 have a median wealth of €11,400, while median wealth in the 45-74 age group is between €154,700 and €231,000. From this age onwards, many individuals start “dissaving”, e.g. by transferring a portion of their wealth to their children. Respondents’ marital and family status also plays a role. For instance, single-parent households, in particular, are significantly less well off than couple households. Median wealth for single parents was €14,600, which was significantly lower than that of couple households and also significantly lower than that of people living alone without children (€40,800).

Households invested more in shares up to 2021

Researchers also focused on households’ investment behaviour and debt. Between 2017 and 2021, households invested more in securities. The share of households investing in shares rose from 11% to 15%. Younger households also invested more in funds and shares. However, they continued to hold the bulk of their financial assets in liquid types of investment that are perceived to be low-risk, despite the fact that these currently yield only low returns. This is shown by the barely changed share of households with savings accounts, which, despite the long period of low interest rates that lasted until mid-2022, are still held by 71%.

According to the study, the share of indebted households has declined. In addition, indebted households spend a slightly smaller share of their net income on interest and repayments. The report concludes that, in terms of the debt situation, and taking a long-term view, households in Germany seem to have been in a good position as they entered the phase of rising interest rates that began in 2022.