The interest rate on consumer loans has declined over a number of years, and the level is now historically low. The average interest rate on consumer loans has fallen by 0.5 percentage points a year, whereas the mortgage rate has only fallen by 0.23 percentage points. This shows statistics from August 2018 issued by Danmarks Nationalbank.
The interest rate on consumer loans offered by banks and targeted at Danish private customers is currently historically low after a decline over a number of years. The interest rate on consumer loans, compared with other types of loans, is the rate that has fallen most.
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The interest rate on consumer loans is, however, still higher than the mortgage rate. This is due, for example, to the fact that the bank agrees with a higher risk of consumer loans, as this type of loan is usually given by the borrower to provide some form of collateral. In connection with a mortgage, the borrower must, in many cases, make a form of mortgage if the offer for a loan becomes applicable. This is part of the total loan process. If you are not able to repay the money that the bank has borrowed you, they will take for example. Your home if you had chosen to pledge this.
What is a consumer loan?
A consumer loan, as the title suggests, is a loan that is typically taken in connection with consumption. For example, it may be that your motorcycle is too old and You need renewal. This electric bike has so far served as your daily transport to and from work, as well as when the training center calls. In addition to that, public transport is not your cup of tea, and you prefer to keep cycling and thus get the same amount of exercise and fresh air. Here is the intention to raise a consumer loan fine if you can not afford to pay the cash price right now and here. In the end, however, it’s up to you how you want to spend the money as they roll into your bankbook.
Additionally, pay attention to not linking lending with consumer loans. The process for these loans looks very different, however, with some key differences. Typically, people choose lending to borrow 1,000 – 10,000, and as the name suggests, it’s a “quick” way to borrow money – it’s almost too easy. In the case of credit loans, there will usually be a high repayment amount due to credit costs, which should be one of the factors that prevent you from agreeing to such an agreement.
What is a mortgage?
A mortgage is taken for example in connection with the purchase of an apartment, townhouse or villa. Indeed, the few can afford to pay the total price of the property and therefore often end up with a mortgage. There are several types of mortgages, but the two primary types are a bank loan and a mortgage. In order for you to borrow a mortgage, mortgage banks and banks require that you have saved 5% of the purchase price. The law stipulates that, as a home buyer, you can borrow 95% of the value of the house.
According to Danmarks Nationalbank, the rate of mortgage is at its lowest ever. The interest rate fell to 2.19 percent in March, which gave the Danes a larger margin. This meant, among other things, that homeowners could deduct more from their debts.
Banks & households
Although the banks’ mortgage situation is about 2.5 times larger than their total supply of consumer loans, banks lose more money on consumer loans than mortgages.
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From October 2013 to July 2018, banks’ total consumer loans to households have risen from 114 to 121 billion. Of course, there are other options than mortgage banks and banks offering consumer loans to households. However, this is to a limited extent.
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