One of Finansinspektionen’s (FI) assignments is to promote a high level of protection for consumers on the financial markets. FI does this in part by conducting an annual survey of new consumer credit. The survey helps enhance our understanding of consumer credit and the risks it entails for borrowers. Loans and loan service payments have a major impact on household finances. For a borrower with an average income that takes out a large consumer credit, the monthly payment for the interest and amortisation payments can correspond to the payment of a significantly larger mortgage.
This is the fourth time FI has conducted its consumer credit survey in Sweden. Over time, we are seeing that the people who took out new consumer credits had higher incomes. Somewhat fewer borrowers with lower incomes took out unsecured loans of more than SEK 100,000 compared to previous years. Despite the slight decrease between 2019 and 2020 in the share of borrowers with a deficit in a simplified discretionary income calculation, approximately 15 per cent of the borrowers with new unsecured or non-property-backed loans had a deficit, as did one-fifth of the borrowers with goods purchased on instalment. This is a sign that there are deficiencies in the lenders' credit assessments.
Our survey shows that borrowers with the highest incomes took out the largest loans. But lenders with lower incomes paid more for interest and amortisation in relation to their disposable income. On average, persons with new unsecured loans used 8 per cent of their income in 2020 to make interest and amortisation payments on the loan. The monthly payment's share of income has fallen over time due to lower interest rates, rising income among those taking out loans, and slightly longer maturities on larger principals. Small consumer credit amounts, less than SEK 5,000, increased 25 per cent compared to 2019. The increase is related to more invoices and goods purchased on instalment, which could be the result of an increase in e-commerce during the pandemic.
The share of borrowers who received a collection notice was 5.7 per cent. This percentage has decreased since 2018 but increased slightly between 2019 and 2020. Young borrowers and borrowers with low incomes run a higher risk of experiencing payment problems. Eight per cent of borrowers under the age of 25 received a collection notice within five months. The survey largely captures borrowers with invoices that became interest-bearing and in many cases already resulted in payment reminders. The share of borrowers with invoices that receive a collection notice is higher than it would be if the survey had included all invoices. For all loans in the survey that were not an invoice, 1.6 per cent of the borrowers received a collection notice within five months in 2020.