A study commissioned by the financial industry, Saving, Borrowing and Payment Methods, examines the loan behavior of Finns. According to the study, indebtedness of Finns is growing as both consumer and mortgage loans have increased. 2,500 Finns were interviewed for the survey, and the interviewees were aged between 15 and 79 years. Saving, borrowing and payment methods is a follow-up study that is conducted every 1-2 years.
Consumer credit is not compared, even if it is profitable
According to the survey, one in four Finns currently has consumer credit. Most consumers (81%) who have a consumer credit have a consumer credit open. 16% of consumers have two open loans and 3% have three or more.
According to the survey, the average size of consumer credit is now € 12,100. At the time of the previous survey, the average consumer credit in 2015 was EUR 10,400, which is clearly on the upward trend. Loans of this size would definitely be competitive, as for example, there are large cost differences in loans of EUR 15,000.
Despite growing interest in consumer credit, Finns forget to compare and compete with consumer credit. As many as 39% of respondents who intend to take out consumer credit intend to apply for a loan from only one bank. 64% intend to apply for a loan offer from up to two banks.
However, comparing consumer credit and competing would be worthwhile, as for example, there is great variation in consumer credit interest rates and differences in total cost of loans. Even with small loans of a few thousand euros, the difference between the total cost of the cheapest and the most expensive loan can be thousands of euros.
Mortgage volumes and loan periods are on the rise
The average size of mortgages is also rising. In 2015, Finns had an average home loan of EUR 85,700, this year the figure has increased to EUR 107,500. The share of mortgages over EUR 150,000 has grown significantly: well over 25% of mortgages have over EUR 150,000. One of the positive developments in loan development is that over the past two years, the most high-income loans (= annual income of more than € 100,000) have borrowed more than EUR 150,000, which are also in the best position to repay the loan. .
Mortgage loan repayment periods will also be extended. Currently, mortgages are on average 19.3 years, while in 2010 the average repayment period was 17 years. In 1998, mortgages were paid off on average over an 11-year period, so there has been a clear upward trend. The most typical repayment periods for mortgages taken over the past two years are 20 and 25 years, so the trend can be expected to continue to rise in the future.
Mortgages are subject to slightly more competitive tendering than consumer loans. 58% of those planning to take out a mortgage will ask for a loan offer from two or more banks. About one-third intent to settle for a loan from one bank. In the Helsinki metropolitan area, loans are more competitive than in rural areas.
One can prepare for rising interest rates
Although interest rates on mortgages have been relatively low for a long time, 77% of mortgage debtors are prepared for interest rate increases. The trend is upward, as in recent years only about 72% of debtors were prepared for interest rate increases. The most common way to anticipate rise in interest rates is through savings (36%), and the second most common way to cover loan security (18%).
Respondents who were not prepared for the rise in interest rates often stated that they were not prepared for the small amount of the loan or the term of the loan would expire in the near future. 14% of respondents did not consider it necessary to anticipate a rise in interest rates, and 13% did not believe that interest rates would rise. 9% of respondents have not thought about rising interest rates, and 6% are not worried about rising interest rates until the moment.