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45.6% of Households Managed to Save – Issue of Research Bulletin For 2019

During 2016, 45.6% of households managed to save part of their gross households' income, up from 36.6% in 2013, and 23.7% in 2010.

The information is one of a number of interesting trends that emerged from the Central Bank of Malta's third Household Finance and Consumption Survey (HFCS), which was carried out in 2017. The two previous waves were carried out in 2010 and in 2014.

According to the latest survey, 97.1% of all households held at least one type of financial asset, two percentage points more than in 2013, with the median value of financial assets held standing at €22,512.

Bank deposits are the most common type of financial assets held by households: 96.4% of those sampled in 2016.

The survey also looked at the total household debt across all those households which have some form of debt, which includes both mortgages and non-mortgage debt such as debt on credit cards and other assets. The median value of this works out to be an estimated €40,000, significantly higher than in the previous wave. Comparison with the previous two rounds suggests that the increase was predominantly driven by higher mortgage debt.

In the meantime, the median value of mortgages stood at €80,000 in the latest wave.

The ratio of median mortgage debt to the gross household income was 221.7% in 2016, an increase of 8.8% from 2014. This increase reflects the above-mentioned increase in median mortgage debt, which may partly reflect increasing property prices and longer loan maturities.

In spite of this increase in the median mortgage debt, the mortgage debt servicing cost was estimated at 14.5% of the income of those households, only half a percentage point more than in the previous round, reflecting declining interest rates.

Collection of data for the fourth wave of the HFCS is scheduled to commence in the last quarter of 2020.


  • In 2016, there were close to 170,000 households in Malta, with an average of 2.5 members per household (2010: 2.9 members).
  • 30% of the households have just two members, while 25% are one-person. Less than a fourth of households had four or more persons (2010: 33%).
  • 80.6% of households own their main residence (2013: 80.1%) - either outright or with a mortgage.
  • 67.4% of total gross household income came from employment. Income from pensions and social transfers accounted for 13.6% and 2.9%, respectively. Income from financial investment stood at only 2.1% of the total.
  • The median gross income of Maltese households in 2016 was estimated at €25,417, an increase of 23.6% since 2010, which was largely driven by a rise in employee income.
  • The estimated household median net wealth (the total holdings of real and financial assets net of liabilities) stood at €236,529 in 2016.
  • The HFCS-based Gini coefficient, which measures inequality, shows that in 2016, inequality in household net wealth edged up to 0.60 (2010: 0.57).

The HFCS findings were published in the Central Bank of Malta's Research Bulletin for 2019, which was first published last year, as part of the 50th anniversary. This second edition carries three other articles which cover a broad range of research areas.

"Due to the rapid pace of change of the Maltese economy, policymakers require new datasets and new analytical tools to be able to adequately monitor developments. This is particularly true in areas such as the study of inequality and the housing market.

"At the same time the development of new models and new datasets takes considerable time and resources, which sometimes may jar with the short time span available for policymakers to take their decisions. This is why it is fundamentally important that economic research is forward looking and proactive, to ensure that it remains relevant to policymakers," the Bank's Chief Economist Aaron Grech stressed.

The first article presents an update of the Central Bank of Malta's main macroeconomic model of the Maltese economy. Despite considerable changes in the macroeconomic environment in recent years - namely a period of very strong economic growth - many of the key relationships underlying the Maltese economy remained broadly unchanged. However, results indicate that Malta's price dynamics have become less dependent on foreign prices and increasingly sensitive to developments in the domestic labour market. The rising share of services within Malta's economy, together with a reduction in fossil fuel demands due to reforms in the energy sector, have also meant that the islands have become less sensitive to oil price fluctuations.

To complement STREAM, the Bank has in recent years constructed another model: MEDSEA. Using the newest version of the model, the article shows how a rule constraining the maximum loan that can be given for a particular house value would theoretically dampen the response were house prices to rise. This highlights the potential for macroprudential policy to be used to limit systemic risks.

The last article of the Research Bulletin uses data derived from mortgage contracts granted by the major credit institutions in Malta to compute a range of house price indices for the period 2010-2018. The study finds that after a period of relatively muted growth over the period 2011-2014, ranging between 1.1% and 1.5%, subsequent years saw a marked pick up, averaging between 7.8% and 8.4%. However, the study also notes that the mortgage market now typically covers only around half of the property market in Malta, with the other half dominated by other means of financing. This may limit the generalisation of the article's results to the overall property market. 

45.6% of Households Managed to Save – Issue of Research Bulletin For 2019

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