The financial health of families is experiencing a crisis of historic proportions. The latest data indicates that delinquency rates on loans granted to households reached 12,1% in April, a level not seen in over twenty years . This phenomenon is not an isolated event, but rather the result of eighteen consecutive months of increases in the default rate, making it clear that many households are struggling to make ends meet and meet their banking obligations.
The comparison with the previous year is quite devastating for the average person. In just twelve months, loan defaults have tripled, rising from 3,7% to over 12%, an increase that has set off alarm bells among financial analysts. Currently, it is estimated that more than five million people have at least one loan in default, which complicates access to credit for households and slows down private consumption.
A snapshot of defaults by loan type
If we look at the details of what is being defaulted on most, we see that personal loans and credit cards are the biggest culprits in this debt crisis. These types of loans, typically used for unexpected expenses or consumer goods purchases, have a delinquency rate approaching 15% , the highest in the entire system. Credit cards are not far behind, with their default rate climbing to 12,5%, reflecting how using plastic to finance daily life has become a double-edged sword for many users.
In a somewhat more comfortable situation, but also on the rise, are mortgage and secured loans. Although mortgages are usually the last thing people stop paying for due to fear of losing their homes, their delinquency rate has also experienced a slight increase, reaching 1,5%. However, the gap between household and business delinquency rates is enormous, as defaults in the corporate sector barely reach 3,3%, demonstrating that the real financial strain lies within household finances.
Consequences of financial exclusion and relief measures
Being in dire financial straits has a direct consequence: losing access to credit. According to various reports from private consulting firms, the fact that 26,7% of debtors are in default means that millions of people will be excluded from the formal financial system for quite some time. This represents a significant setback for overall economic activity, as household credit can hardly act as a catalyst for growth while the list of defaulters continues to grow at this rate.
Faced with this situation, some banks have begun taking steps to prevent things from getting out of hand. They have announced specific debt consolidation programs that allow users to combine all their payments into a single monthly payment with a term of up to ten years. This measure aims to reduce the monthly burden on families by adjusting payments to their income levels and preventing their credit history from being permanently damaged, even if it means paying interest for a much longer period.
The reality of household debt remains a complex puzzle with no easy short-term solution, and opinions are divided on whether the peak has been reached or if the worst is yet to come. Although some voices in the banking sector suggest the situation is stabilizing, the most recent data from April shows that the rate of defaults has picked up again . What is undeniable is that households' capacity to save and repay is stretched to its limit, and the financial system will have to closely monitor this trend to prevent the number of people excluded from credit from reaching record lows.
