Nordic Debt Collection Analysis 2019

Nordic Debt Collection Analysis 2019

In our report Nordic Debt Collection Analysis, we provide an economic view of the Nordic countries, seen from the debt collection perspective. The analysis is mainly based on Intrum’s vast debt collection data from the region, analysed in a macroeconomic context.

Key findings

Moderate growth in debt collection cases in 2018

  • Age carries diminishing value - young take on less credits and senior citizens more
  • Nordic youth fairly pessimistic about their future financial outlook, while seniors increasingly consume as groups who are still in the labour force
  • The number of debt collection cases among seniors over 60 years old have increased with 25 per cent over the last two years.

Young - Decreased access to credit

The number of debt collection cases among youth has increased at a moderate rate in the last two years. The level of debt among youth is lower compared to other age groups, as they have had less opportunity to build debt.

Over the last 18 months the average principal amounts among youth have fallen, with Finland as the only exception.

If we view the overall development in the Nordic region, the falling principal amount among youth is a stark contrast to other age groups. This supports the argument that fewer are being granted access to credit markets.

The larger economic differences among youth means that those who do not enter the labour market are also cut off from the credit market.

On the other hand, those who do enter the labour market have fewer defaults, behaving like older age groups. As a result, age carries less information about an individual’s propensity to default on his or her credit obligations.

Seniors - Increased tendency to take on debt

Divided into different age groups, the largest increase in debt collection cases in the combined Nordic countries is among debtors over 60 years old. In the last two years, the number of cases has increased by over 25 per cent among seniors, albeit from an initially low level. In comparison, the increase has been only 13 and 11 percent for people age under 30 and 30-60 years old, respectively.

A person who turns 60 years today is probably more likely to be active in the credit market compared to previous generations. And to use credit actively is a necessary condition to default on debt.

Historically, defaults among the elderly have been limited. As defaults become more common, seniors look increasingly more like their younger peers in credit behaviour.
Defaults among seniors increases at a faster pace than other age groups. Given that the defaults are increasing from a low level compared to other age groups, seniors’ credit behaviour looks increasingly more like their younger counterparts.

Conclusions

Different age groups are behaving in an increasingly more homogenous way. From one direction, the youth default at a lower rate, making them look increasingly more like older generations.

Worse credit behaviour from seniors and improved behaviour from the worst debtors, the youth, means that age carries less and less information for predicting credit behaviour. As a result, age might soon be just a number.

Over the past years, age seems to contain less information about credit behavior. Underlying long-term demographic trends & new consumption patterns can be two explaining factors.
Anette Willumsen, Managing Director – North European Region

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