Lithuanians borrow less, but larger amounts and more responsibly
The Lithuanian non-bank financial sector is showing maturity: the consumer credit market survey of 2018 Q4 shows that Lithuanians borrow less, but more significant amounts and more responsibly. The representatives of the financial sector observe that the declining number of borrowers also shows decreasing access to consumer credit for lower-income clients.
There was a significant drop in the number of „short-term“ credits over the past year. The number of applications for small consumer credits (up to EUR 290) decreased by a quarter. Compared to the end of 2015, the number of such applications decreased by four times in total. In 2015 Q2 the portfolio of such credits amounted to EUR 10.34 million, whereas in 2018 Q4 – only EUR 2.63 million, Finco announced in a press release.
Over the past three years, the size of an average consumer credit increased by 1,5 times. At the end of 2018, Lithuanians borrowed on average EUR 1,045, while in 2015 - only EUR 659. For the first time, consumers also borrow less, but in higher amounts - at the end of 2017 the average new consumer credit amounted to EUR 1.059.3, this year it reaches EUR 1.231.8 - 2.2 times more than at the end of 2015 when the average amount borrowed was EUR 546.
"Even taking into account the inflation, rising living standards, and other indicators, the increasing amount of an average consumer credits shows that people are borrowing not impulsively, but deliberately - for larger purchases, housing repairs, and other needs," said Šarūnas Frolenko, Head of Financial Services Association FINCO.
Nevertheless, the head of FINCO also believes that the declining number of borrowers also shows another trend - the decreasing credit availability for lower income earners. "We can see the development of a type of marginalization when a low-income person who has thought through his ability to repay the credit, nevertheless cannot get credit thus improving his well-being“ - said the head of FINCO.