Unsecured debt - scope and characteristics of borrowers

The aim of this report is to shed light on the distribution of unsecured debt among the population and whether there are groups that are particularly vulnerable to or exposed to such debt. Throughout the 2000s and up to 2020, the growth in unsecured debt has been substantial, and since 2014 there has also been an increase in defaults on such loans (Finanstilsynet 2020). The Debt Information Act requires financial undertakings from 1 July 2019 to report debt information related to unsecured loans. As a result, detailed information is available about the population's unsecured debt.

In the calculations, the entire population over 18 years of age is divided into groups by age and gender, level of education, total income, household type, immigration category, pension status, socioeconomic status and county. Unsecured interest-bearing debt is calculated for each group within these variables. In order to form a picture of how vulnerable the groups are to this debt, we have also calculated the extent of the debt in relation to total income and gross wealth. Corresponding calculations have been made for those with a debt settlement agreement and for persons who have received financial advice and guidance or an individual plan in connection with social assistance.

Interest-bearing unsecured debt amounted to NOK 149 billion as of 31 December 2019, which corresponds to about 4 per cent of the total debt in the population. Twenty-nine per cent of all persons over the age of 18 had such debt, and the average was NOK 122 100. The debt was unevenly distributed, and the half with the highest loans accounted for 97 per cent of all debt.

Men have significantly higher debts than women; NOK 149 500 compared to NOK 90 600 on average. The debt is highest among those aged around 40 to early 60s. With the categories we have used in this report, we also find that persons who have a low formal education or an immigrant background, single fathers and recipients of disability benefit have markedly higher debts on average than the population as a whole, as well as lower incomes and wealth.

Persons with a debt settlement agreement are particularly disadvantaged with regard to unsecured debt. Ninety-two per cent of these have interest-bearing unsecured debt, with NOK 415 500 on average. The corresponding figures for those who received financial advice and guidance or an individual plan together with social assistance were 52 per cent and NOK 140 500. Both of these groups have high debts relative to income and wealth compared to the national average. On average, interest-bearing unsecured debt accounted for 182 per cent of gross wealth and 105 per cent of total income for all persons with a debt settlement agreement, while the corresponding figures for the whole population over 18 years of age were 1 and 7 per cent respectively.

Compared with the distribution of debt in the adult population as a whole for the variables described, it was often completely different groups that were disadvantaged with regard to unsecured debt among persons with a debt settlement agreement and those who had received financial advice and guidance. Among those with a debt settlement agreement, those with a high level of education, old-age pensioners and couples without children had higher debts both in absolute terms and in relation to income and gross wealth.