FI Analysis 48: Increasing number of Swedish loans become debt registered with the Swedish Enforcement Authority

FI and the Swedish Enforcement Authority have analysed how new debt registered with the Swedish Enforcement Authority from consumer credit has developed between the years 2020 and 2023.

In 2023, more than 160,000 borrowers of new debt were registered with the Swedish Enforcement Authority. This is an increase of around 23 per cent since 2020. In SEK, the increase during the same period amounts to 51 per cent. Other new debt registered with the Swedish Enforcement Authority that was not related to consumer credit increased less during the same period.

"Many households have faced economic challenges in recent years. The fact that we are see a large increase in unpaid consumer credit indicates that people who have such loans are particularly vulnerable during periods when everything becomes more expensive," says Moa Langemark, a consumer protection economist at FI.

Two general reasons for why new loan debt has increased

Of the borrowers who had debt registered with the Swedish Enforcement Authority, most borrowed from a so-called niche bank. A niche bank is a borrower who specialises in certain types of products, for example issuing consumer credit. In 2023, almost 40 per cent of all borrowers that had debt registered with the Swedish Enforcement Authority borrowed money from a niche bank. In SEK, these loans amount for 60 per cent of the debts. This is one general reason for why loan debt is increasing at the Swedish Enforcement Authority.

The second reason why more borrowers are having new debt registered with the Swedish Enforcement Authority is that consumer credit institution, or those that are usually called instant loan firms, lent 50 per cent more in 2023 than in 2020. Instant loan firms represent a smaller share of the total debts, but their borrowers experience payment problems much more often than borrowers of niche banks or large banks. As many as one out of 20 instant loan recipients becomes registered with the Swedish Enforcement Authority. Among those that borrowed money from a niche bank, around one out of 100 experience serious payment problems, and among borrowers of large banks the corresponding figures i around one out of 250.

"All borrowers should undergo thorough credit assessments. FI will look at this in particular in the coming year. The fact that lenders soon will not be able to charge more than 20 per cent in interest will reduce the risk of debt traps, but more needs to be done," says Moa Langemark.

FI and the Swedish Enforcement Authority also analysed how loan debt is distributed by gender and age. The results show that the percentage of borrowers experiencing payment problems was higher in all groups in 2023 compared to in 2020, except in the youngest women (below the age of 24).

"In summary, the analysis shows that too many borrowers are taking loans that they cannot repay. Lenders must take more responsibility, and we must also have a healthy credit culture among consumers – otherwise we risk seeing even more being registered with the Swedish Enforcement Authority in the future," says Davor Vuleta, personal finance spokesperson at the Swedish Enforcement Authority.