Consumer credit, the turning point: lower rates and demand from young people decisive

Not only mortgages: the interest-rate cyclone has also hit the other side of household financing, that of consumer loans, special purpose and personal loans, as well as the cessione del quinto. And as with real estate and mortgage-backed transactions, the worst seems to be behind us for this market segment. In the current year, in fact, a return of demand is on the horizon, thanks to the long-awaitedreversal of ECB rates and also to the boost given by the growing demands of younger customers: a phenomenon, the latter, whose downside is a potentialincrease in riskiness for banks and other operators in the sector.

In short, a favourable picture in many respects, but certainly not without its uncertainties, is the one outlined by the report on loans produced in tandem by the global information company Experian and Segugio.it, the Italian market reference point for online comparisons of loans, insurance and utility services, which belongs to the MutuiOnline group. The analysis, which takes into account personal loans, finalised loans and cessione del quinto (salary-backed loans), thus providing a general picture of Italians' financing demands and identifying underlying consumer trends, seems to identify a turning point.

"Loans are on the upswing and we are approaching the time when rates will come down, giving new impetus to the sector," explains Alessio Santarelli, CEO of Segugio.it, who precisely for this reason forecasts "a major increase in demand in the second half of 2024". The light has actually already appeared at the end of the tunnel, at least in some areas: on the basis of Experian's Credit Information System, in the whole of 2023 the volume of applications for loans aimed at the purchase of certain goods or services has grown by 10% over 2022 and by 27% over 2021. In the same period, demand for personal loans and salary-backed loans still lagged behind, by 1.6% and 4.5% respectively, according to the Assofin Observatory on Consumer Credit and Credit Cards.

"The increase in requests for special purpose loans, compared to those for mere liquidity that characterised the previous quarter, is a good sign because it indicates a lower level of distress with respect to the ongoing economic crisis," Santarelli resumes. In this respect, it should be noted that a boost has already come from the rates themselves, which for these types of loans already started to fall last year, from the average peak recorded at 8.3% in April to 6.6% at the end of 2023. On the contrary, conditions for personal loans and cessione del quinto have remained unfavourable, except for starting to improve in the first months of this year, making us confident in a turnaround.

The youngest customers, those belonging to the 'Generation Z' in the 18 to 28 age bracket, seem to play a significant role in this respect, with a steady increase in the use of loans to finance goods and services useful for their future that would not otherwise be accessible. Their applications grew in one year in terms of volume by as much as 28% for special purpose loans and 21% for personal loans, to account for almost a tenth of the total. "The increase means greater risk for those in the sector," admits Santarelli, noting in particular how the under-25s in the high and very high risk bands have grown by 2.3 percentage points in 2023 and represent 7.3% of the total in this age group.