22 Aug 2013

European household credit markets continue to fall: Key findings from the ECRI Statistical Package

Ales Chmelar

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The ECRI Statistical Package 2013, Lending to Households in Europe has revealed that European households registered a second consecutive year of falling real values of loans: 2012 followed the historical first drop recorded in 2011. While debt reduction proceeds across the continent, deleveraging to disposable income and to GDP remains limited due to unequal and sluggish recovery. The year 2012 was therefore one of stagnation in household-credit markets.

Aggregate housing loans in the EU registered negative real growth rates, illustrating long-term problems in the overall economy. Together with record-low interest rates on housing loans in some countries, this finding reflects lower consumer confidence and the increased strain on households’ medium-term income.

While this year’s degree of credit reduction in the EU overall has not been as significant as in previous years, Euro Area (EA) households registered a bigger drop in household credit than in 2011, underlying the prevailing economic problems of last year. At the same time, the EA periphery continued to reduce its household debt by record levels.

The stagnation is also present in the normally rather resilient Central and Eastern European countries where the credit reduction extends beyond the former periphery to Poland and Slovenia. Households in Hungary, Eastern Balkan countries and in the Baltic states continued to reduce their debt exposure significantly throughout 2012.

The Key Findings relate to the more detailed ECRI 2013 Statistical Package covering 38 countries: the 27 EU member states, three EU candidate countries (Croatia, Turkey and the Former Yugoslav Republic of Macedonia), the EFTA countries (Iceland, Liechtenstein, Norway and Switzerland) and four key global economies (the United States, Australia, Canada and Japan). The purpose of the package is to provide reliable statistical information that allows users to make meaningful comparisons in time and between these countries.