Unsecured consumer credit in a major hike

According to a study released earlier this year, the growth rate of unsecured consumer credit, such as overdrafts and credit cards, has been “significantly accelerated” over the past year. Measured in spring 2017, the growth rate was 13.7% in March, compared with 7.1% at the same time a year earlier.

In addition, unsecured consumer loans are currently being raised at record levels. Over the past year, unsecured consumer loans totaled USD 242 million. Again, the growth rate of collateralised consumer credit has been rather sluggish. In recent years, collateralised consumer credit has grown steadily at around 2%.

We have over 60 unsecured loans in our loan calculator

We have over 60 unsecured loans in our loan calculator

According to a study released earlier this year, the growth rate of unsecured consumer credit, such as overdrafts and credit cards, has been “significantly accelerated” over the past year. Measured in spring 2017, the growth rate was 13.7% in March, compared with 7.1% at the same time a year earlier.

In addition, unsecured consumer loans are currently being raised at record levels. Over the past year, unsecured consumer loans totaled USD 242 million. Again, the growth rate of collateralised consumer credit has been rather sluggish. In recent years, collateralised consumer credit has grown steadily at around 2%.

Why unsecured consumer loans are gaining in popularity

Why unsecured consumer loans are gaining in popularity

What, then, are the reasons that may explain the rapid growth rate of unsecured consumer credit recently found in Finnish consumers? A study suggests that falling interest rates may have affected the popularity of unsecured consumer credit. Interest rates fell by almost one percentage point in 2016. According to the bank, the average interest rate on unsecured consumer loans in March 2017 was 4.97%.

A loan of 0% is also possible. Compare our flexible loans in our loan calculator. In the loan calculator you will find, for example, a loan company where new customers can get a Flexible Credit at 0% with a 47-day payment deadline. The average interest rate on secured consumer loans remained somewhat lower compared to unsecured loans. In March 2017, the average interest rate on covered consumer loans was 3.01%.

It is natural that collateralized loans may be granted to customers at a lower rate, as when seeking collateral, the bank will seek to reduce its own risk in granting the loan. When collateral acts as collateral for a loan, the bank can afford to lower the interest rate on the loan.

A study suggests that falling interest rates may have affected the popularity of unsecured consumer credit.

Unsecured consumer loans will be repaid over an increasing period of time

Unsecured consumer loans will be repaid over an increasing period of time

A study commissioned suggests that recent changes in consumer credit repayment times have also been marked. How, then, are consumer credit payment terms different from one year ago? Currently, the loan is being borrowed with an ever-longer repayment schedule. The data collected gives us a look beyond 2011. At the time, unsecured consumer loans were repaid within 7 years and 9 months, by early 2017, the unsecured consumer loan repayment period had increased by several years. This year, the average repayment period for unsecured consumer loans is 12 years and 8 months.

Other loans

Mortgage lending has also been on the rise in recent years. The fall in interest rates is likely to have attracted new mortgage borrowers to borrow USD 1.6 billion, up nearly USD 0.2 billion from a year earlier in March. Lower interest rates often encourage consumers and first-time home buyers to move around. When interest rates are lower, the total cost of the loan can be saved.

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