November 30, 2022

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- Majority have consumption problem - V.G

– Majority have consumption problem – V.G

Big summer: Handelsstands Forening believes that Norwegians will spend an average of NOK 22,000 on Christmas presents. This is still lower than last year. Illustration: Gorm Kallestad / NTP

Some people really struggle. Others may require actual equine therapy.

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Prices flies away. Interest rates are rising at a record pace.

People are worried For their economy.

But many people struggle more with habits than bad advice, private economist Andre Joe Wright tells VG at PN Bank.

– As people have watched their consumption, Norges Bank is right, the majority of people can handle a rise in interest rates. We must feel the pain of canceling your streaming subscription and giving up on vacation. It’s a real pain if you’ve had decades of good times.

Raid is director of consumer markets and has analyzed Norwegian consumption over time for several years.

Many have maxed out their debt

Numbers expert: Andre Joe Wright, private economist at BN Bank.

There may be some who recognize the fact that moderation in recent years has not fully described their own consumption.

– That’s natural, because we’ve had low interest rates and electricity prices for a long time, which means people have gradually increased their home loan.

Especially in the eastern region and big cities, low interest rates may mean you have maxed out the loan and still have a lot to deal with.

Are you one of the many who have taken out a lot of loans at low interest rates, but now notice that consumption has slowed down a bit? Advice Here is VG’s reporter.

98 percent will be fine

In a new report from Norges Bank, “Norwegian landlords have good service capabilities”, It turns out that most people should have a lot of “free income” – even if the interest rate is higher than the price of electricity right now:

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The sample covers 65 percent of households, which they believe is a representative sample.

The income groups you’ll see on the chart are:

  • 1: 148,000–322,000
  • 2: 322,000–445,000
  • 3: 445,000–625,000
  • 4: 625,000–891,000
  • 5: 891,000 – 2,100,000

Necessary expenses such as electricity, food, fixed household expenses, interest and other necessary consumption (such as clothing) are then deducted.

In this situation, 4.5 percent of households have no income to cover interest and ordinary expenses. But with savings, less than 1.5 percent will have no money to cover them.

That means 98 percent will make it.

– Banker Reid says the problem of consumption is bigger than the problem of not having enough income for proper consumption for most people.

Consumption has increased

We cannot ignore the fact that one is actually struggling – And that group is growingLike many others reports have pointed out.

– A shame is that there is a group that already lives a moderate consumption and has a real financial crisis, i.e. 5-10 percent of households. For others, it depends on whether you’re used to spending a little more.

Statistics Norway’s figures show that costs An average increase of NOK 18,000 For Norwegian families this year, this corresponds to NOK 1,500 per month. It hits the lowest-income people the hardest. But with “extra consumption” on the rise, most people have plenty to keep up with.

This can be anything from restaurant visits and Futura orders to car leasing, shopping, tire hotels and vacation trips.

Oslo Handelsstands Forening believes that average Norwegians Spend NOK 22,000 In this year’s Christmas gifts. However, this is lower than during the pandemic.

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Even more popular: Food delivery to your home has increased in recent years in major cities. Futora tells VG that she doesn’t see any drastic cuts right now, although it has eased up a bit in Oslo. – An oddity is that when the media write big stories about uncertain finances, we see an immediate drop in orders, but eventually people pick up their mobile phones and order again, says communications manager Mats Dokka Blaibakken.

Well used

Norges Bank What causes so many people to shove coffee down their throats thinking how much free funds you should have is that very few people live at or below what the bank considers a realistic budget.

– Most people use 30 to 40 percent more. And the proportion of over-utilizers has increased sharply in recent years.

Supplemental consumption increases especially among people over 30 years of age. Those who come directly from student economics often find it easier to cut a budget.

– It’s only when you wait a few years with a generous cash flow that you develop habits and spending that are difficult to cut. It’s easy to rent a car that you think you qualify for, and that you may not be able to afford or have saved up.

Older customers with lower consumption tend to change their habits faster.

by epidemic Recorded money saved. However, what Wright sees is that even those who don’t save are “engaging a little bit more” after the pandemic.

– Those who save the least, engage quickly and spend the most when it’s over.

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Reite acknowledges that banks have been the driving force behind the fact that 1.1 million Norwegians have consumer loans – that is, some form of credit with running interest.

Adding consumer loans, car loans, and renovations to a home loan has become more common in recent years—as you also see the value of the home increase.

Endre Jo Reite calls this a “line-rich” feeling.

– We see a regional environment where people in the Eastern region feel more affluent as they experience the greatest growth in home values ​​and are more diligent in borrowing.

– From the Living Conditions Survey, we also see an insane number of people who view consumer debt as a burden – 27.4 percent of 25- to 44-year-olds.

– Are we benefiting a little from what is happening now?

– I think it is important to increase the awareness of consumption, the interest rate will be higher than it is now. So the hope is that people who don’t have such a good perspective will try to get an overview.

In the chart below, you can see the various interest rate scenarios that Norges Bank is considering. Here we have combined all income groups, so people with lower incomes have even less free funds, while people with higher incomes have more.

Pssst! Now that interest rates are rising, mortgages are becoming more expensive. Read Hallgeir Kvadsheim’s tips Three Steps Every Mortgage Holder Should Take (Your Money)