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Despite inflation, interest rates for consumer loans have not yet risen sharply

The rise in consumer prices has recently accelerated both in Finland and in Europe. Rising inflation is a double-edged sword: it can be good news for borrowers, while lenders usually suffer. While consumer credit has still kept interest rates low, that may change soon.

In 2022, inflation has disciplined consumers with a heavy hand.

The price of electricity has risen sharply, and inflation has not gone away even in grocery stores and gas stations. Surprisingly, inflation has not yet made its way to consumer credit, as interest rates on such credit have remained moderate despite global changes.

The changing world situation and rising interest rates are worrying the credit market

The Finns have gotten into debt rather carelessly in recent years. Many have had to borrow because of the financial problems caused by the world situation, while interest rates have remained low for years. Recently, the world has been rocked by dramatic political changes that are also affecting the global economy. At the same time, the changed economic situation has made many Finns reluctant to take out a loan.

It is clear that borrowing is always associated with risks and that the monthly costs of the loans can change significantly with the expected increase in interest rates. So, of course, a healthy dose of caution when it comes to getting into debt is in order. Accordingly, excessive fear is not necessarily profitable either, because credit money can help you achieve your dreams and, of course, get rich in the form of real estate wealth. Single out consumer loan interest, like the unsecured loans Omalaina.fihave remained relatively low.

Credit is often a necessity for many of life’s major purchases, but there are also many uncertainties that come with being in debt.

If you need consumer credit, now is the time

The daily lives of banks and financial institutions are starting to feel the effects of inflation, which may result in prices for unsecured loans, such as consumer loans, rising significantly in the future. Taking out a new loan should not be put off indefinitely if a major purchase is pending, because interest rates may rise in the future, even on unsecured loans, due to interest rate pressures on lenders. The increase in consumer prices will certainly also affect the demand for consumer credit.

Finns took out a lot of unsecured consumer loans in the summer months of 2022

From May to July 2022, banks issued 21 percent more unsecured consumer loans than in the same period a year ago, the company says Bank of Finland. In July, the average interest rate on these new unsecured consumer loans was 8.6 percent.

According to Bank of Finland estimates, the number of cross-border consumer loans granted by Norwegian and Swedish credit institutions also increased in the second quarter. Unsecured consumer loans go in a very different direction than mortgage loans. In July 2022, 23 percent fewer new home loans were taken out than at the same time a year ago.


Richard Dement

The author Richard Dement