The financial health of Spanish consumers suffers some ailments when summer arrives. Consumer loans taken out in the months prior to the holiday period have grown strongly this year and have reached their highest level in two decades, only comparable to the times of the real estate bubble. The trend is an indication that a larger part of consumption is sustained by debt, despite the rise in interest rates.
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The latest data from the Bank of Spain shows that between March and June the volume of these loans granted stood at 16.762 billion euros, 12% more than a year earlier. The figure triples that of some years in the past decade and is only surpassed by the levels reached in 2006 and 2007, when more than 18 billion euros were exceeded.
The consumer association detects an unprecedented intention to apply for personal loans
These loans have different purposes, ranging from a trip to the purchase of appliances, studies, or a car. However, experts place June and the previous months as those with the highest volume of indebtedness for going on vacation and also highlight the levels reached, higher than other times of the year such as Christmas. Current figures are 91% higher than ten years ago and show a relentless progression since the pandemic.
In its latest barometer on consumer loans, the banking consumer association Asufin has detected that the intention to apply for a consumer loan reaches 35.9% of respondents, the highest percentage since it has been conducting this work. The cause lies, according to them, in “a still high propensity to consume, supported by a solid labor market and the inertia of several years of optimism,” to which is added “the loss of purchasing power derived from inflation.”
Asufin detects the greatest weight of loans requested for going on vacation. The Bank of Spain does not have data on the destination of the money, but the association’s survey shows that 17% of loans have that purpose, when in its last barometer before summer it was barely 9%. It is already the main reason, only behind the need for money, and ahead of buying a car. “It is one of the fastest growing in recent years,” says the author of the barometer, Antonio Luis Gallardo.
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The increase in indebtedness occurs despite financial institutions applying interest rate hikes early since the start of the Iran war. The ECB raised them in June for the first time since 2023, but the Euribor has been rising for months, while consumer loans have also become more expensive. Asufin estimates that loans of less than five years have gone from 9.88% to 10.06%. The Bank of Spain’s statistics show, however, that in June the cost of these loans ranges from 18.3% for those associated with cards to 6.84% for conventional consumer loans.
For now, the Bank of Spain does not detect major risks for households, and the Government limits its action to the bill presented at the beginning of the year to cap interest rates on consumer loans. Despite cases of abuse, the only limits so far have been set by the courts. The regulation is now in an uncertain parliamentary process.
In its latest report on the financial situation of households, the Bank of Spain highlights their “historically low” levels of indebtedness and financial burden. The savings rate is around 12% and consumer credit, it indicates, is expanding supported by the “dynamism” of private spending. Household income is growing, but at a more moderate pace.
The sharp increase in consumer credit contrasts with a more moderate evolution of mortgage debt. Between January and June, banks granted mortgages for 42.610 billion euros, 3% more.
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