Most things change. The economy changes, the weather changes, the job market changes. But one thing that doesn’t seem to change, is the Norwegians’ dominance in consumer loans and household debt. Even the UK struggles to reach the mountainous heights of debt that these northerners have been able to consistently gain and sustain over the years (coupled with the seeming inability to get rid of it).
Even when we account for a significant reduction in Norway’s total consumer debt which has taken place since the crawl-in of the Corona crisis, this country still almost comes out at the top in terms of total consumer debt. It turns out that these former Vikings’ instincts for pillage and plunder have been transformed into a more peaceful and amicable way of getting their hands on shiny things and consumer goods – namely, by paying out of their pockets and, when necessary, taking up loans.
So how do the Norwegians stand in relation to other countries when it comes to consumer loans and household debt? How can the numbers be explained? And will we ever see Norway come further down on the list of countries with the most debt? Keep reading to find out!
Total Norwegian household debt as share of GDP, compared to other countries
According to statistics from Norway’s official credit indicator, the total household debt is currently at a staggering 3,800 billion Norwegian Kroner (NOK), which is roughly 322 billion British pounds. Within this number, about 15 billion pounds is unsecured debt in the form of consumer loans and credit card debt.
If we look at the UK’s 1.3 trillion British pounds of household debt, as shown on Statista.com, the above numbers might seem puny. Nevertheless, the thing that matters when it comes to comparing household debt between countries is not the total amount, but how high the debt is in relation to the GDP of each country.
Following are some of the top countries Statistia lists in terms of household debt as share of GDP (numbers from 2020):
- Hong Kong: 258%
- United States: 216%
- China: 182%
- Japan: 176%
- Norway: 165%
- Denmark: 163%
- Thailand: 160%
- United Kingdom: 146%
As can clearly be seen above, Norway is among the top five countries that have the highest accumulated household debt. The country’s standing in consumer loans is quite similar, according to the largest research website in Norway, Forskning.no.
We alluded to in the title that few beat Norwegians in consumer loans and household debt – not even the UK.
Significant reduction in total consumer loan debt during the last few years
Having established the northerners’ dominance in accumulating debts, we do have some interesting data about the actual decrease of consumer loans in Norway. According to Lan for deg, one of the major loan comparison companies in the country which features facts and statistics on everything loans, Norway has, since 2019, seen a significant reduction in total consumer loan.
Over the span of two years, the consumer loan debt has gone down from 170 billion NOK, or 14 billion pounds, to 140 billion NOK, or around 12 billion pounds in 2021. Furthermore, this tendency seems to continue increasing; only between 2020 and 2021, the consumer loan debt went down by almost 20 billion NOK.
Why the strong reduction?
One factor that has definitely had a large impact, is the Corona crisis. When times are precarious, and we don’t know what to expect in terms of work or income during the next few months or years, we have a tendency to take up less loans, and instead try to get by on what we have. Instead of taking up more unsecured debt during Covid, Norwegians have tried to pay down debt with high interest rates.
At the same time, Covid is probably not the only thing that reduced the amount of unsecured loans. As a result of new developments that were made in Norway’s financial market in 2019, the banks have gained more information on how much unsecured debt people have.
With a more accurate and truthful foundation for making decisions, the banks have started seeing that many of the loans that they accepted in the past should never have been given out. Therefore, more banks are now denying applications from people who have a lot of debt from before, and who show poor abilities to repay any new loans.
Will the UK ever surpass Norway in consumer loans?
In case you’re starting to wonder whether the UK will ever surpass Norway in consumer loans, that’s a discussion we can’t give a definite answer to – but one thing is for sure: fewer Norwegians are taking on unsecured debt, and only time can tell how the situation will continue developing.