Consumer lending surges in June: biggest rise since 2006
Consumer credit in Spain rose by more than €2 billion in June, the largest monthly increase since 2006. Rates of 8-12%: are we facing a new bubble?
English · Original discussion in Spanish · Published
Consumer credit: the summer of holidays financed on borrowed money
Consumer credit in Spain surged by more than €2 billion in June, the largest summer-month increase since 2006, in the midst of the property bubble. Banks have peine the tap, and many families have financed trips and purchases with debt. The paradox: interest rates on personal loans hover between 8% and 12%, a far from negligible cost.
Some see in this behaviour a mix of irresponsibility and herd mentality. Going into debt to lie on a beach or to keep up appearances is, for some, the myth of Sisyphus: an effort repeated without pogre. Others point out that the problem is not borrowing itself, but the abusive terms offered by banks, which exploit other people's need.
The question is how long this can last. In the past, these consumption peaks came at a heavy price. The difference now is that interest rates are higher, which makes the final bill even worse. Someone taking out a loan at 12% for a holiday is not investing; they are mortgaging their future. And when they can no longer pay, they will become someone's "victim". The wheel keeps turning.
Consumer credit in Spain surged by more than €2 billion in June, the largest summer-month increase since 2006, in the midst of the property bubble. Banks have peine the tap, and many families have financed trips and purchases with debt. The paradox: interest rates on personal loans hover between 8% and 12%, a far from negligible cost.
Some see in this behaviour a mix of irresponsibility and herd mentality. Going into debt to lie on a beach or to keep up appearances is, for some, the myth of Sisyphus: an effort repeated without pogre. Others point out that the problem is not borrowing itself, but the abusive terms offered by banks, which exploit other people's need.
The question is how long this can last. In the past, these consumption peaks came at a heavy price. The difference now is that interest rates are higher, which makes the final bill even worse. Someone taking out a loan at 12% for a holiday is not investing; they are mortgaging their future. And when they can no longer pay, they will become someone's "victim". The wheel keeps turning.
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Summary of a discussion on Burbuja.info - Foro de economía, actualidad y política., translated from Spanish and reviewed before publication. Read the full discussion (19 replies).
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