High debt levels makes Nordic households vulnerable for higher interest rates

A strong economic development and low interest rates have resulted in a high credit demand among Nordic consumers during recent years. Intrum's new report Nordic Debt Collection Analysis shows growth in the number of debt collection cases in Norway, Sweden and Finland.

The results in Nordic Debt Collection Analysis, gathered from Intrum’s vast debt collection data from Denmark, Finland, Norway and Sweden, show:
• A growth of debt collection cases between Q2 2017 and Q2 2018 of 35 % in Norway, 33% in Sweden and 3 % in Finland.
• Denmark stand out from the growth with the number of debt collection cases decreasing with 9 %, and a decrease in average principal amount with almost 50% during the period. 
• Increased credit demand among persons over 60 years of age in both Sweden and Norway. The number of collection cases among debtors older than 60 years have grown with 50 percent in Sweden, and with 40 per cent in Norway. 
Low interest rates have increased credit demand
As a consequence of low interest rates, demand for debt have increased across the Nordic region. The higher debt levels makes households more exposed for upcoming hikes in interest rates.
- Higher interest rates, on for example home loans, will reduce disposable income, and in turn reduce available money to pay off all other credit related expenses. Hence, we expect an increase in debt collection cases as interest rates increases, said Anette Willumsen, Managing Director Northern European region.
Changing credit habits among elders
Both Sweden and Norway experiences increasing payment problems among elders. The reason for the strong increase in payment problems in Norway and Sweden among the oldest debtors is mainly related to the changing credit habits and an ageing population.
- Elders are more familiar to the use of credit to pay for services and goods, and many struggle with adjusting their spending to a lower income level after retirement. We are concerned about the strong increase in debt collection cases among seniors, although the default levels are still low for this group, said Anette Willumsen. 
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