Analytics, Baltic, Banks, Financial Services, Loan

International Internet Magazine. Baltic States news & analytics Friday, 14.08.2020, 16:54

Luminor: Estonians least eager of Balts to take consumer loans

BC, Tallinn, 11.07.2019.Print version
Among residents of the Baltic states, Estonians have used the least consumer credit over the past two years, around 25% of people in Estonia have taken out a loan for consumption, while the figure in Latvia and Lithuania stands around one third, informed LETA/BNS.

Residents of Latvia, particularly young Latvians, are borrowing to cover unexpected expenses more frequently than their Baltic neighbors -- 31% have taken out a loan for such purpose while the figure stands at 17% in Lithuania and at 16% in Estonia, Luminor said.

During the past two years, 25% of the respondents in Estonia, 33% of Latvians and 34% of Lithuanians had taken a loan for consumption.

"A consumer loan is generally taken to cover major purchases. 35% of respondents in Latvia have taken a loan for that purpose, while in Lithuania and Estonia the figure is 43%. What is positive is that the smallest part of the respondents, four to six percent, said that they would borrow to cover expenses on entertainment or everyday costs. That shows that people have become more cautious and responsible when it comes to borrowing and no longer make ill-considered decisions," Inguna Krieva, head of private lending sales at Luminor, said.

Merely a third of Latvians compare several loan offers, while 37% of Lithuanians have used the option. The respective figure among Estonians was 28%.

Most of Latvian and Lithuanian respondents who have not taken out a consumer loan within the past two years said they have knowingly done so to avoid debt obligation. Two thirds of the respondents in Estonia in the same segment said that they simply have not had the need for additional funds.

When asked about the reasons for taking out a consumer loan, the largest number of respondents said they would most likely use it to buy real estate or a vehicle or renovate their home.

Most respondents said they would not take out a loan if its monthly repayment would constitute too large a sum of their monthly expenses. Close to 17% said over a fifth of their monthly income is spent on loan repayments. In Latvia, 53% of people who have taken out a consumer loan said that less than 20% of their income is spent on repayments, the figure in Lithuania was 63% and in Estonia 66%.

Luminor's survey conducted in cooperation with pollster Norstat was carried out in June 2019 among a total of 3,026 people.

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