Approximately one-third of consumer loans issued last year were provided to residents aged 25 to 35 years. Young people under the age of 24 use banks’ loan offers very rarely, according to data from SEB Bank’s Baltic Households Outlook.
A similar trend is noted in other Baltic States. According to data from SEB Bank, 30% of loans in Latvia were provided for everyday needs (consumer loan, overdraft or credit card) to residents aged 25 to 34. In Estonia and Lithuania, on the other hand, this proportion was 35% and 33%. Less than 10% of provided funding applies to residents under the age of 24.
Residents aged 25 to 34 are not only braver than representatives of other age group when taking loans, but also register loans for larger amounts – the average loan amount for this age category in Latvia was EUR 2,900 last year.
Compared with the previous year, the average amount of consumer loans in Latvia has grown more rapidly than that of other Baltic States – by 11%. In Lithuania, the average size of consumer loans had grown by 8% and that of Estonia had slightly declined. Nevertheless, the average size of loans in Lithuania remains the lowest among Baltic States and is EUR 2,600 (in the category of residents aged 25 to 44 years). In Estonia, by contrast, the average size of loans is the highest among Baltic States – EUR 3,000 in the same age category.
«The difference in the size of the average loan amounts in Baltic States can be explained both with the difference in the level of income of residents and the reasons for taking loans. In Estonia, where the average salary is higher, residents can take larger amounts in loans. In Lithuania, on the other hand, salaries are smaller in comparison, so are the loans. Similar to mortgage loans, it is important to make sure total loan repayments do not exceed 40% of residents’ income. In addition, when taking a loan, it is also important to have reserves for unforeseen situations in order not to experienced difficulties when repaying loans,» – notes SEB Bank expert Edmunds Rudzitis.
Last year, demand for consumer loans in Lithuania and Estonia had increased – loan portfolios of banks in Estonia and Lithuania had increased by 1.8% and 6.3% respectively. In Latvia, on the other hand, the volume of new loans remains lower than repayments of previously provided loans. As a result, the loan portfolio of banks in Latvia was 3.2% lower in comparison with 2014.
Furthermore, Latvia differs from its Baltic neighbours with the fact that it is more difficult for residents to repay their previously taken on loans. Latvia also has the highest percentage of missed loan repayments. For example, the proportion of loans with payments expired for more than 90 days was 12% of the total loan portfolio across the country last year.