03/2021

Economical trends in 2021 – for what purposes do consumers apply loans

We did a research and studied the loan statistics from the year 2020. We discovered that loan consolidation has increased, young people apply more loans than before and it is easier to apply loans with a companion.

Young people apply more loans

The young generation applies loan for living costs but also to maintain a certain living standard or a status. The biggest groups for loan applicants are youths in their 20s and 30s.

Three of the most common loan purposes for the 20-year-olds are study, wedding and living expenses. 30-year-olds, on the other hand, apply loans most for wedding, renovation and motor vehicles, which tells more of a stable living situation.

20-year-olds apply loans to improve the quality of life. They most commonly apply loans for hobbies and pets, investments and holidays.

Even though 20-year-olds are the one of the biggest individual groups of loan applicants, their applications get most often rejected. The biggest reasons is probably the covid-19 pandemic, which has impacted mostly on the young generation. This is because young adults often work in the customer service section and do part-time jobs during studies.

Couples receive loan offers more easily

Lenders seem to emphasise the role of a co-applicant as one of the loan acceptance criteria. Co-applicant is most commonly a spouse or a partner.

According to Sortter’s statictics, the acceptance rate with co-applicant increased over 14,3 percentage point after July 2020, when the first temporary interest cap came into effect. The acceptance rate for applicants applying loans by themselves has simultaneously decreased 4,1 percentage point.

We can assume that at least during spring 2021 lenders accept loans easier from the co-applicants. This presumably continues until the end of the temporary interest cap in September 2021. 

“Hygge” continues – in own home and homeland

Consolidating loans has increased during the temporary interest cap, which presumably continues in 2021. Loans are consolidated especially by well and extremely well earned consumers.

However, an attitude shift towards debt consolidation loans can be seen. Debt consolidation loans have become more popular amongst regular citizens. In addition, existing debts are compared and their rates are checked more often than before. Debt consolidation loans are often a sensible way to control one’s own economy and save from expenses.

Renovation is one of the most common loan purposes. Finnish people often renovate their apartments, houses or summer cottages in the springtime. There is usually a peak in applying renovation loans from March till June – we’ll expect this to occur this year as well.

Sortter’s statistics show that consumers have often bought new motor vehicles during April till May. Due to coronavirus, another peak from July till September is visible in 2020 data.

Many consumers might have bought a summer car or a camper van for a holiday trip in their own homeland. Also, one of the reasons could be that consumers have bought a car for travelling to work so they could avoid using public transportation during the pandemic.