Consumer Finance in Western Europe 2008

Introduction

Lafferty Consumer Finance in Western Europe 2008 analyses the size and breakdown of consumer indebtedness and consumer finance outstandings in the region. It contains 16 country studies: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, The Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom. A mixture of quantitative and qualitative methods is used by a dedicated team of in-house researchers and analysts to produce accurate and unbiased data. The report is reader-friendly through the use of a bullet point format and graphs, pie charts and tables to help illustrate key data.

Highlights Mortgages remain the most popular form of lending in Western Europe. However, there remain significant differences within Europe regarding the scale and form of consumer borrowing.

With a total consumer indebtedness to personal disposable income ratio of 103.1 percent in 2007, Western Europe ranks second behind North America and ahead of Asia-Pacific, Middle East & Africa, Latin America and Eastern Europe.

The report analyses the size and breakdown of consumer indebtedness in the region, highlighting significant differences in the levels of mortgage lending, consumer finance and credit card outstandings as a proportion of overall indebtedness.

In a country like Denmark, the high level of indebtedness is very much a function of the high level of mortgage lending. Neighbour Finland has a much lower household debt to income ratio, among the lower half of markets in Western Europe.

Obviously home ownership levels will impact on the amount of mortgage lending, but so too will house price inflation. In some instances, for example, mortgage outstandings represent well over 100 percent of personal disposable income. In certain other countries the equivalent ratio is below 50 percent. Similarly, non-mortgage finance ratios vary between 7 and 75 percent. A further breakdown to the level of credit card outstandings to PDI provides an indication of the importance of credit cards as a lending instrument rather than as a means of payment in each individual market.

The importance of different types of lending instrument varies across Western Europe, and 'fashions also change within individual countries. In the UK, for example, consumers have been moving from credit cards to cheaper lending products and have reduced credit card spending.

In countries such as Finland and France, personal loans remain the favoured non-mortgage borrowing instrument. In Germany and Austria, in comparison, overdrafts remain popular as a means of short-term borrowing.