Most loans for consumption are small and have a high effective interest rate and a short maturity. Households with large loans represent the largest share of new lending, though, and the large loan segment is growing the fastest. Households with high income have the largest loans. Borrowers with mortgages normally have larger consumption loans than borrowers without mortgages. These are some of the results from FI’s mapping of consumption loans, Swedish Consumption Loans 2018.
Finansinspektionen has mapped the market for consumption loans by analysing 148,000 borrowers at 20 different firms.
Of the consumption loans included in the analysis, most are small and have a high effective interest rate. This is because the maturity is normally short and the fees that are charged are large in relation to the size of the loan. Households with large loans represent the largest share of new lending, and it is also the large loan segment that is growing the fastest. This increase has been particularly large the past four years, a period which has featured a strong economy and low interest rates. In addition, the mortgage cap and the amortisation requirement may have contributed in part to the increase in the use of large consumption loans for housing purposes and other purchases.
Consumption loans represent a small percentage of household debt, so they constitute only a limited stability risk. However, consumption loans affect household finances. Households with large consumption loans spend on average one-fourth of their income on interest rates and amortisation payments. If these households also have mortgages, they pay even more.