Many people these days are in the process of rounding off their summer holidays, after nice days around Norway. For many, the great holidays can come with a powerful aftertaste.
According to figures from the Debt Register, Norwegians’ unsecured debt increased by almost NOK 2 billion in just over a week, from Friday 23 July to Friday 30 July.
– Bananas
In other words: Norwegians have been on holiday with borrowed money.
– People have eaten some bananas during the holidays, you can see that in their use. The figures you see now are clearly holiday use, says Geir Grindland, general manager of Debt Collection Partner to Børsen.
He points out that since the Debt Register was launched on 1 July 2019, there has been a clear decline in Norwegians’ unsecured debt, ie consumer loans and credit cards, but that there are still fluctuations.
– The trend has actually been downward, but I think the rise lately has been sharp. I think it’s about people having a holiday in Norway, hotel accommodation is expensive in certain places and people use credit cards when they book a holiday, says Grindland, and adds:
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– The fact that people take water over their heads when they book a holiday is not a new phenomenon.
– Be prepared to lose everything
Paying last year’s holiday
Every year, he experiences an accumulation of debt collection cases throughout the autumn, where many cases can be linked directly to the holiday.
– Many also pay on last year’s holiday. They have not paid for that holiday, and pay for it at the same time as they go out and travel and book a new holiday, Grindland says.
In addition, there is everyday life and the bill wall in August, with mortgages, electricity bills, daycare bills and everything else that has to be paid.
– And then you have used up the holiday money you had. It is quite typical in our industry that we get the most cases in the autumn, says Grindland.
– And it’s about an overconsumption during the summer holidays?
– Yes it does.
– Not worried
Finans Norge is not as worried as Grindland. According to figures from Norsk Gjeldsinformasjon, the total consumer debt was NOK 151.2 billion on 1 August. This is an increase of NOK 1.8 billion last month.
– As expected, consumer debt will increase after society has opened up and many have been on holiday. But the increase is relatively weak and does not give cause for concern, says Gry Nergård, consumer policy director at Finans Norge in a press release.
Grindland does not agree.
– 1.8 billion is high. It may be that there have been similar numbers before, but it is high, he says.
Grindland points out, among other things, that household debt is on the rise, something too Finanstilsynet pointed out in June.
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– Household debt is growing faster than income, and the proportion of households with a high debt ratio has increased in recent years. Many households are vulnerable to a significant increase in interest rates, falling house prices or a reduction in income, said the director of Finanstilsynet, Morten Baltzersen.
Backlash alerts: – A bomb
Increasing debt collection
In addition, there has been a negative trend when it comes to debt collection cases. At the end of 2020, Norwegians owed NOK 114 billion in debt collection. This was an increase of six billion from the previous year.
In February, Børsen was able to reveal that Norwegians’ non-performing debt collection debt at the end of January was a total of NOK 57.8 billion, according to figures from Experian.
This applies to so-called “open payment remarks”, ie debt collection cases that have gone so far that they have ended up with the bailiff. The figure was an increase of 14.8 per cent compared with the same time last year, which amounts to NOK 7.8 billion.
– Quite violent, was the host of “Luksusfellen” Hallgeir Kvadsheim’s mention of the debt figures.
Debt collection debt is increasing: – Quite sharply
Consumer loans are more often defaulted on
What gives extra cause for concern when consumer loans increase is that these are defaulted to a far greater extent than other loans. Finanstilsynet’s report for April stated that the default rate for consumer loans was 14 per cent at the end of 2020, an increase from 11.1 per cent the year before.
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For banks that specialize in consumer loans, the figures were even worse. The default rate was 20.5 percent. This means that one in five consumer loans there is defaulted on. There, too, the 2020 figures were a sharp deterioration from the previous year, when the default rate was 15.4 per cent.
During 2020, the lending volume declined quite sharply, but an increasing proportion of borrowers did not repay the loans.
This, combined with increasing household debt and debt collection, as well as increased credit card use during the holidays, makes Grindland worried.
– It is natural that some will not be able to pay the consumer loan or credit card debt. How much of this will be unsecured debt that has fallen due? he asks.
The debt register’s figures show that credit card debt as a whole rose by 1.6 billion in July. There, they believe the development is positive.
– Even if the total debt goes up, the figures still show that most people pay their credit card bills on time, and the extent of consumer loans and overdue credit card debt remains virtually stable at a low level. This is good news with regard to the prevention of debt problems, says general manager Egil Årrestad in Gjeldsregisteret AS in a press release.
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