International news

The rise in consumer prices has accelerated recently both in Finland and Europe. Rising inflation is a double-edged sword: it can be good news for the debtor, while lenders usually suffer. Consumer loans though have still kept their interest rates low but this might change soon.

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

The price of electricity has risen sharply, and inflation has not escaped even in grocery stores and gas stations. Surprisingly, inflation has not yet found its way to consumer loans, as the interest rate on these loans has remained moderate despite global changes.

The changing world situation and rising interest rates are causing concern in the loan market

In recent years, Finns have gotten into debt quite carelessly. Many have had to take out a loan due to the financial problems caused by the world situations, and at the same time, interest rates have remained low for years. Recently world has been troubled by dramatic political changes, which also affect the global economy. At the same time, the changing economic situation has made many Finns hesitate to take out a loan.

It is clear that borrowing always involves risks, and with the expected increase in interest rates, the monthly costs of the loans can change significantly. Therefore, a healthy caution when it comes to getting into debt is of course reasonable. Correspondingly, excessive anxiety is not necessarily profitable either, because loan money can help you realize your dreams and, of course, also get rich in the form of housing wealth. But consumer loan interests, like the unsecured loans from, have remained relatively low.

A loan is often a necessity for many of life's major purchases, but there are also many uncertainty factors associated with indebtedness.

If you need a consumer loan, now it’s the time

The effect of inflation has begun to be seen in the everyday life of banks and financial institutions, which may mean that the prices of unsecured loans such as consumer loans may rise significantly in the future. Taking out a new loan should not be postponed indefinitely if there is a larger purchase ahead, because in the future the interest rates of even unsecured loans may rise due to interest rate pressures placed on loan providers. The rise in consumer prices will certainly also affect the demand for consumer loans.

Finns have taken out a lot of unsecured consumer loans during the summer months in 2022

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

According to the Bank of Finland's estimate, the number of consumer loans granted by Norwegian and Swedish credit institutions lending across the border has also increased in the second quarter. Unsecured consumer loans go in a completely different direction than mortgage loans. In July 2022, new home loans were taken out 23 percent less than at the same time a year ago.