Quick tips are criticized in the media and have been criticized for the last 15 years. Consumers’ growing need to get a loan straight away without collateral is a concern for politicians.
Do Instant Loans cause over-indebtedness in Finnish households, so is there a need to regulate the industry more closely, but what is the role of banks in all of this? In this article, we will look at this issue through the statistics recently published by the Bank of Finland and try to understand the role of instant loans in the overall picture of indebtedness.
Quick loans and household indebtedness
The statistical fact is that the average debt burden of Finns has doubled in the last 20 years. The amount is incomprehensible. Why do Finns take so much debt? Are they big consumer loans and easy quick tricks or maybe something else in the background?
The emergence of the area of a single dollar reversed the floating interest rates of the markka period. With interest rates dropping and the interest rate risk dropping significantly, the willingness of Finns to finance their homes with ever-larger mortgages began. The mortgage portfolio has quadrupled since the introduction of the dollars.
Well, of course, living in today is paying so much for. Low-interest rates have increased the average mortgage almost exponentially. But aren’t nearly the same amount of instant loans? At least, according to the writing of the media, one could imagine this. In order to understand the overall picture of household indebtedness, it is useful to illustrate the distribution of average household debt across different types of credit.
Mortgage loans account for 76% of all household bank loans. Consumer credit granted by banks accounts for 12%. The growth rate of loan stocks is noteworthy. The growth rate of consumer loans is about 5% in terms of percentage, but in dollars terms, the growth rate of mortgages is almost double that of consumer loans. Households’ indebtedness (see top picture) is therefore mainly explained by the rapid growth in housing loans.
Quick loans vs banks
From the statistics presented, it is difficult to see that consumer credit is the main pun on Finns’ willingness to pay. Banks’ dominant position in Finnish society keeps mortgages and credit card debts at the heart of the debate. Let’s just look at the amount of credit card debt and overdrafts from various banks in relation to consumer credit. Below are the mutual amounts of loans granted by banks.
New card loans were issued on a quarterly basis this year at about USD 4.8 billion, while new consumer loans and quickdraws amounted to about USD 0.7 billion. Thus, credit cards are granted seven times the amount of instant loans scammed by the media and politicians. Why not discuss this? Why do you always have a quick nipple in your teeth that does not represent the essence of the national debt in gross dollars?
Number of households’ instant loans
A quick loan term is hard to measure quantity. In the media, the part above the blue bar of the graph below is often combined in its entirety under the term “instant loan”.
The share of real high-interest leverage in the average economy is negligible. “Small loan companies” that grant small amounts at higher interest rates are almost indistinguishable from the graph. However, this group receives the most media attention. Peer-to-peer loans and Norwegian banks represent a much larger and rapidly growing share of loans. Still, by counting the “credit institutions”, that is, the banks, and the “other financial institutions” that were already active in the sector before loans, they cover nearly 80% of the $ 19bn receivables.
So again, the total household loan stock is about $ 126.5 billion and the “quick loan companies” manage $ 1.5 billion. Only 1.2% of Finnish household debt comes from instant loans, which includes all unsecured loans from traditional banks! The claims of the real devils in the industry, the “Small Loan Companies”, remain in perils.
Thus, in the area of unsecured credit, “banks” and “instant loans” compete with decision-makers and the media. It is now recalled that as the blue bar rises to USD 19bn, the mortgage portfolio has risen to USD 96bn and that new card and overdraft facilities will be raised by about USD 4.6bn in the quarter. Thus, the total receivables collected by the “instant loans” companies in previous years together are less than the amount of new card loans per quarter.