Statistics Finland says Finland’s average ratio of household debt went up by 3.7 percent by late last year compared to figures from one year earlier. According to the data, the amount of loans held by households grew to over 132 billion euros by the end of the 2014.
The household indebtedness ratio is calculated as the ratio of loan debts at the end of a quarter to total disposable income during the preceding four quarters.
According to the figures, households had a total of 259.6 billion euros in financial assets and 141.3 billion in debts at the end of 2014. During the last quarter, financial assets grew by 1.2 billion and debts by 0.1 billion. As a result of these changes, the net financial assets of households increased to EUR 118.3 billion at the end of the quarter.
Despite the net investments of households moving into negative territory in late 2014, their financial assets increased thanks to holding gains, as households withdrew assets from quoted shares and debt securities. The popularity of mutual funds continued, however, with households investing 0.3 billion. The shift from fixed-term deposits to cash deposits also continued.
Household debt is defined as the amount of money that the adults in the household owe financial institutions, normally consumer debt and mortgage loans. A significant rise in the level of this debt coincides historically with many severe economic downturns, including the US and European economic crises of 2007-2012.
Several economists have argued that lowering household debt is essential to economic recovery.
