According to market research company Finaccord, in 20 countries – namely Austria, Belgium, the Czech Republic, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Norway, Poland, Portugal, Russia, Spain, Sweden, Switzerland, Turkey and the UK – total consumer mortgage and non-mortgage loans outstanding totalled 9.08bn euros at the end of 2011, up from 8.03bn euros in 2007.
Of the 9.08bn euros total, 7.35bn was attributable to mortgage lending and the balance of 1.73bn to other forms of consumer lending, including car finance, credit card debt and personal loans.
Alan Leach, director of Finaccord, said:
“In most countries, the idea that households are shoring up their financial situation by paying off loans is simply not correct. Rather, the value of outstanding consumer debt is a structural feature of many economies and for a lot of individuals it is simply not possible for them to manage without it.”
Only two countries have been paying down their debt since the credit crunch hit in 2007. Ireland has reduced its consumer borrowing by 39.2%, and Spain by a marginal 0.3%. Turkey has ramped up its borrowing the most, by 136.5%, followed by Poland at 131.1%.
In the UK, which is Europe’s largest market for retail lending in absolute terms, mortgage and other consumer borrowing reached a total value of 1.67trn euros at the end of 2011 – equivalent to 26,619 euros (or about £22,469) per head – with mortgage debt reaching 1.43bn euros (up from 1.37bn at the end of 2007) and other types of consumer debt standing at 0.24bn (down slightly from 0.26bn in 2007).
Leach said: “Looking at the total value of consumer debt outstanding doesn’t tell the whole story. Rather, a further crucial metric is the split of that debt between relatively ‘cheap’ mortgage lending, for which interest rates tend to be low, and comparatively ‘expensive’ non-mortgage debt, for which interest rates are invariably much higher.”
