An overview of the debt behavior of Estonians was prepared by the financial services infrastructure company Aktiva Finance Group, which conducted a similar study for the second time this year. “In economically difficult times, in addition to the usual spring analysis of missed payments, we decided to evaluate the situation already at the beginning of December to have a new vision of the current situation of consumers”, explained the company manager. representative.
The number of debtors does not increase significantly, but the amount of debt increases dramatically
The interesting thing about this economic crisis is that everyone feels the problems, but the number of debtors from each credit provider does not increase very noticeably and the increase in debts is very fragmented. Compared to the spring, the number of debtors increased by only 1,500 people. In total, people have 224,000 active debts that need to be repaid, and their total debt has increased from 280 million to 370 million. The average debt amount increased from 3,600 euros to 4,400 euros in six months.
A labor market dependent on the resilience of entrepreneurs
Despite layoffs in many Estonian companies, the job market remains at a historically high level. There are around 642,000 employed people aged between 20 and 64, in addition to around 50,000 pensioners and students. Compared to the beginning of the year, the number of employed people decreased by only 1%.
The important question is how long entrepreneurs can last under current conditions. If an economic collapse occurs, the job market could collapse as well. For example, in 2010, compared to 2008, the number of employed people decreased by approximately 100,000 units. If such an event were to happen again, the impact would be much more devastating than the coronavirus crisis confinement.
Next, we will take a closer look at the debt situation in November 2023.
The number of people with payment problems remains almost unchanged and in six months the growth was a few percentage points: 83,253 in spring 2023 compared to 84,910 in November 2023.
Unfortunately, the average amount has increased significantly even for those debtors who have more than 3 debts, which means they received an additional loan somewhere or another previously concluded loan has expired.
Payment disorders are more common in men
Although the percentage of women in the population is higher in Estonia, missed payments are even more common among men. Among people with payment difficulties, the percentage of women is approximately double that of men and represents 34% of debtors, while the percentage of men is 66%. Despite this, the average amount of debt for both men and women has remained relatively at the same level, being more or less equally distributed by gender.
The number of debts is increasing among people of active working age
The number of people in debt increases most rapidly in the 18-25 age group, but suddenly decreases in the over 46 age group. This shows that young people are less responsible and therefore their level of risk is higher for lenders. Debt relief for people aged 46 and over confirms that people have income or reserves to draw on to get out of debt.
The debt amount of Estonians remains higher
In Estonia, Russian-speaking residents account for 26% of all debtors, which means that there are proportionately more Russian-speaking people among the debtors.
At the same time, Estonians’ average debt amount is more than 600 euros higher than last year, and Estonians also have more debt per capita.
Compared to people who speak Estonian and Russian as their native language, the number and amount of debts of people who speak other languages is lower. This is often due to the fact that many of them are foreigners whose permanent residence is not in Estonia. Therefore here they have fewer credit agreements and lower credit limits.
The geographical distribution of debtors in Estonian counties remained largely the same, but decreased in Ida-Virumaa.
Despite the difficulties entrepreneurs face these days, the job market has remained surprisingly strong, and the future depends on how long entrepreneurs can hold on. It is quite certain, however, that creditors’ losses in the short term will rather increase due to the growth of the average amount of debt, which in turn will be amplified by high interest rates, due to which the discount rates of debt amounts debt will arise.
Aktiva Finance Group evaluates the creditworthiness of individuals and manages overdue credit portfolios through OÜ Krediidiregister and OÜ Julianus Inkasso.
Comment Read comments (2)
2023-12-19 17:00:00
graphs-the-amount-of-debts-owed-by-estonian-residents-is-growing-exponentially