In 2022 the consumer lending landscape in Germany is expected to be characterised by a coming together of opposing trends stemming from unusual circumstances, the COVID-19 pandemic, and the economic fallout from the Russian invasion of Ukraine. Consumer lending is set to benefit from recovery from the worst of COVID-19 and the normalisation of product availability and consumer spending, with consumer lending in terms of gross lending value exceeding the pre-pandemic level of 2019, driven by mortgages/housing.
In 2022, the European Central Bank (ECB) raised its main refinancing interest rate for the first time since 2011, including an unprecedented 75 basis points hike in September. Thereby, it signalled a new interest rate regime, intended to counter inflation, which surged to a half-century high in the eurozone.
In 2022, mortgages is expected to post slowing growth in terms of gross lending value compared with the previous few years. This slowdown was particularly evident in the second quarter of the year, following the impact of the Russian invasion of Ukraine, which led to skyrocketing energy prices, surging inflation, and rising economic uncertainties.
Buy now pay later (BNPL), an emerging short-term lending scheme, has continued to gain popularity in Germany in 2022, already accounting for a significant share of overall e-commerce sales. The concept behind it, of splitting the cost of purchases into instalment payments spaced out over a predetermined period of time, is in essence not completely new, considering credit card lending and non-card lending via banks and retailers.
Over the forecast period, consumer lending is likely to see a challenging economic environment, due to the ongoing impact of the energy crisis, inflation more broadly, and what is expected to be a considerable decline in purchasing power in 2023. Following a decade of steady economic growth prior to the pandemic, Germany will find itself in a new and much harsher economic reality, with considerable implications for consumer spending behaviour.
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Aggregate of Consumer Credit and Mortgages/Housing. Gross Lending: The total value of loans advanced by institutions in a given year; data refers to single year only. Outstanding Balance: The collective amount owed by borrowers at the end of a given year; data refers to the cumulative impact of debt.See All of Our Definitions
This report originates from Passport, our Consumer Lending research and analysis database.
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