The Norwegians today have $ 115 billion in consumer debts, according to the Danish Financial Supervisory Authority.
And it's getting bigger. We must return to the financial crisis in 2008 to find a higher growth rate. The growth of last year in this type of loan was 11.4%. The previous year, the growth was 15%.
Credit cards, consumer loans and other loans can be useful for some, but many also mean less sustainable personal financing that can be difficult to control.
Several now warn that the escalation of debt burden represents a risk to the Norwegian economy. The strong growth of consumer loans has also made the government have problems. Therefore, the government now wants to introduce a separate regulation that can regulate who is allowed to increase the debt of consumers.
These are the changes:
Among the proposals of the Danish Financial Supervisory Authority, which are in consultation until December 6, 2018, are:
Loans will not be granted if the client does not have sufficient funds to cover normal living expenses after an increase in the interest rate of five percentage points on the total debt of the client.
Loans will not be granted if the aggregate debt exceeds more than five times the annual income.
No loan with maturity will be granted for five years.
In contrast to the issuance of mortgage loans, mortgage banks may not waive the requirements. When the debt record in force in 2019, it is also a requirement that must be taken into account in the assessment of individual applicants.
Reasonable rules that will prevent the growth of the unfortunate debt
The regulation establishes precious requirements that will make it impossible for many who should not be granted consumer loans. It is good for both individuals, families and the community.
Although consumer debt represents a small part of the total debt of Norwegians, the strong growth of this type of loan is enough to steal the brake.
It is not without reason that the Danish Financial Supervisory Authority is concerned that the Norwegians take consumer loans of high interest that they can not serve.
You have no consequences for those who want to clean up their own finances
Customers who have large short-term debt in the form of consumer loans and several credit cards often have very high interest costs. For many of these, it may be advisable to collect loans in one place, if you offer lower interest rates and that the customer receives help to manage the debt.
Finanstilsynet takes into account that it will be possible to refinance the debt, but its proposal implies that the maximum maturity of a refinanced loan will not have a maturity "greater than the remaining maturity of the existing loan with higher maturity."
This is regrettable. Many of the clients who need and want to clean their own finances should receive the opportunity to repay their debts with a maturity which means that they can actually repay the debt. The alternative is that these people miss the opportunity to correct the economy because the terms of the loan are very difficult to fulfill.
The new rules for consumer loans can prevent many Norwegians from falling into a spiral of debt, but it is important that the rules do not interfere with those who want to get out of it.