There has been a lot of writing about consumer loans in recent years and there are many contradictory opinions about how big the growth is and whether it is good or not. There are many ways to measure this in terms of number, sizes and age groups, among other things, and this is probably one of the reasons why there is some conflicting information. For this reason, we have chosen to look at the big picture in this article and describe the rapid growth observed over almost 20 years, but also point to some of the different viewpoints. By consumer loans, we mean unsecured loans, ie loans without a mortgage in a house, car or similar.
Explosion in consumer loans
This was the headline in E24 in 2009 when they wrote about the growth observed over the past two years. Norwegians’ consumer debt was more than 30 per cent higher than it was before the economic crisis hit. In 2010, NRK wrote that Norwegians’ consumer debt had quadrupled since 1997, indicating that more than half of all Norwegians aged between 20 and 60 have consumer loans in one form or another. Several sources write that consumer loans fell again in 2010, but this is perhaps natural after such strong growth for many years. The financial crisis 2008/2009 had a major impact on the growth in consumer loans. Several banking experts that the Evening Post spoke to said that a new trend was observed in financial crisis times as mortgage rates became higher and higher. Then more and more people took out expensive consumer loans to finance their home loan. Consumer Council adviser Bjørnar Eilertsen told E24 that he advises people not to take such loans during a period of pressured finances. The interest rate is often the double of the usual mortgage rate, but it can quickly be tempting when people have payment problems.
After the financial crisis
The economic situation in Norway has improved since 2008/2009 and in contrast to ever higher mortgage rates, we now have record low interest rates. Nevertheless, it is said that there has been a growth in consumer loans in recent years. For example, both Ora Bank and Nord Bank saw strong growth in 2014 and one of the reasons is the growth in lending. For Norwegian, a large part of the growth attributed to consumer loans was distributed via the Internet. Hegnar wrote that in the case of Ora Bank, the growth in lending could be due to an increase in the number of applications for consumer loans as a result of the bank having increased the number of loan agents and strengthened its own sales and marketing activities. It shows that consumer loans have become more accessible and that in itself may also explain some of the growth. As we have written about before, the trend that has emerged now is that people use consumer loans as equity for home purchases. Although we now have record low interest rates, the equity requirement of 15% is difficult for many to meet. There is a great deal of skepticism about this and many are against it, but with some purchases, such as home improvement items, when calculated carefully and carefully, it can be a good way to recover in the real estate market.
The young or the slightly older?
Whether it is the young or the elderly who are most eager to take out consumer loans is also a bit of disagreement. NOVA (Norwegian Institute for Research on Growth, Welfare and Aging) with researcher Lars Gulbrandsen, has found that the proportion who state that they have consumer debt increases with age. According to Gulbrandsen, the group that usually takes out unsecured loans is between 30 and 49 years. Other sources state the opposite, and have rather noticed an increase among young people. Several of the newspapers wrote, among other things, about this in relation to young people who wanted to enter the housing market and used consumer loans as equity. Surveys referred to by recom- mended consumption loans.no show that in recent years, Norwegians in the age group 18 to 29 years have the largest increase in the number of consumer loans. The figures also showed that there is still no increase in the number of non-performing loans. For that reason, one can question how important it is to say which age group takes up the most loans, as long as it is done responsibly. A practical reason why more young people have consumer loans now is that banks have chosen to lower their age limits. The practice was that you had to be at least 23 or 25 years to borrow, but now it holds that you are 18 years in many banks.
Growth or not, it’s up to you!
All loan applications are assessed individually and if you have good control over your finances and take out a consumer loan that you can afford to service, then it can be a great way to realize your wishes and dreams. However, there are many that offer consumer loans, you can see an overview here, so if you want help you can search through Nottore who will contact the best lenders for you. It makes the application process very easy and you get a quick answer.