It is not full of positive news for the Norwegian economy. Even reliable Statistics Norway (SSB) expects a “moderate decline” in the Norwegian economy. This means that Norwegian consumers are likely to continue to tighten.
Because in addition to increased interest rates and expectations that they will rise further, electricity prices and food prices will increase. In some places, fares will be increased, and many may increase taxes as a result of the price hike.
The figure comes at a time when Norway expects higher food prices, which have already risen by 12.7 percent, and some believe the index may be somewhat exaggerated. leading to excessive interest rate hikes.
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Uses force to collect debt
However, one thing that is particularly felt for people with low incomes is the debt collection system.
There has been an extreme increase in the last six months, reflecting the struggle of many to meet their needs. According to recent statistics, the increase in debt collection among Norwegians is approximately 50 percent in six months.
Norwegians have now collected a total of NOK 115 billion in debt.
– These are truly dramatic figures, says Keir Grindland at debt collection firm IncasoPartner in Kristiansand.
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In the last quarter, the number of garnishments, where a surety uses coercion to obtain monetary claims, increased by 2,000. In the month of October alone, 7,160 decorations were registered.
Every month, thousands of Norwegians receive new claims, which are processed, and in large numbers.
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This comes on top of a huge increase in debt collection, which suggests that more and more Norwegians will have to brutally wield the austerity knife to shore up budgets.
– Skyrocketing electricity bills and short-term interest rate hikes naturally have consequences. Now this is felt in low-income families and families with small children on modest incomes, who have a lot of expenses, says Geir Grindland at Inkassopartner to Netavisen.
– Not many people can afford a doctor
He carefully analyzed the statistics and predicted that the increase in debt collection among Norwegians, which reached NOK 115 billion, would lead to forced collections in the next phase. If it is not withdrawn and strong measures are taken, it will lead to more people being forced to sell their houses, cottages and other properties.
This affected Norwegians’ private finances in 2022
Electricity prices have skyrocketed in most parts of the country, something Camila Kokersvold and her family noticed at the time. Received NOK 18,000 as electricity bill for October. In 2022, Norwegians have generally received increased spending. Inflation has led to higher prices for both food and other goods and services. For example has become very expensive It raised the prices of many food items by 20 to 30 percent.
From October 2021 to October 2022, the Consumer Price Index increased by 7.5 percent. According to Statistics Norway.
Consumer Price Index and Inflation
- The Consumer Price Index (CPI) describes the development of consumer prices for goods and services required by private households living in Norway.
- The change in CPI is a common measure of inflation.
Inflation is a sustained increase in the general price level. Inflation equals a fall in the value of money, meaning you get less goods than before for a given amount. For example, if the inflation rate is high, the value of your savings will decrease.
Norges Bank’s target for annual growth in consumer prices over time is closer to 2 percent.
Norges Bank’s most important tool to keep inflation stable Policy rate. Norway’s prime interest rate is the interest that banks receive on deposits at Norges Bank, up to a fixed amount.
The more stable inflation is, the easier it is to make sound decisions about savings, borrowing and interest rates.
High inflation makes holding money more expensive because it is constantly losing its real value. When inflation is high, it is usually variable. Fluctuating inflation creates uncertainty where households and businesses are uncertain about future income and expenses.
Low and stable inflation contributes to efficient distribution of resources in a market economy.
However, inflation should not be too low. This, among other things, means that the structure of the economy is evolving and nominal rigidities may exist, so that it is difficult to reduce nominal prices and wages.
Source: Statistics Norway and Norges Bank
At the same time, the war in Ukraine pushed up the prices of crude oil and refined products. Petrol prices have risen to NOK 30 per litre. However, the price of diesel has been higher than that of petrol for many years, and over time diesel has been less taxed per kroner.
Started at the same time Interest rates will rise sharply at the start of the yearThe key interest rate was expected to rise to 2.5 percent by the end of 2023. This results in a four percent mortgage interest rate. But already in November this year, Norges Bank raised the key interest rate to 2.5 percent. This is the highest level since 2009.
Bank of Norway It has pointed to mortgage interest rates of 4 to 4.5 percent next yearWhen it is predicted Higher electricity prices in 2023.
– We see that many people prioritize paying electricity bills but struggle with other bills. In other words, everything from municipal taxes to doctors and online shopping is now going into debt collection. Those struggling right now don’t prioritize it because the power can go out — and people can’t manage without power, Grindland says.
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In the company’s estimates, there will be a further sharp increase in loan collections, and from June 31 to the end of the year, loan collections will increase by approximately 50 percent. But he hopes the increase will continue.
– We fear this will lead to a large increase in forced sales of houses and cottages, and we are now seeing more foreclosures taking place with property mortgages. He says there is no doubt that many more will be affected in the future.
– I am very worried
In an email, the mayor’s office in Finnmark confirms that the number of cases has increased. This applies to everything from cases where people are getting help with debt settlement to a forced home sale or a bailiff coming in to collect a snowmobile or car. The same trend applies in many other districts.
– Bailiff Tommy Snave says we have escalated the case In Finland.
Storebrand’s Consumer Economist, Cecilie Tvetenstrand, said it was sad to hear of such a development.
– This worries me a lot. From experience, many of those things would have been solved if people had dared to ask for help. But there is a lot of shame in financial problems. People try to find solutions on their own, and then it’s mostly credit cards and consumer loans — and that only comes on top of it all, he tells Netavisen.
He refers to a survey by the store brand, where one in four Norwegians say they have had serious financial problems that have affected their mental health.
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Consumer economists have clear recommendations for what people should do if they find themselves in such a situation.
– For home owners, there are both interest-free repayments and loan tenure extensions. But it is also possible to request payment deferment. In other words, you don’t pay for a few months. He told Netavisen that people often don’t know that banks can help with this.
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– But if you have notices to pay and don’t own a house, it’s very difficult, isn’t it?
– Yes. NAV has debt counselors, and there are some debt collection agencies that have started with debt counseling. But he insists it’s wise to judge someone who’s impartial.
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