1 survey of households repaying multiple debts – global insight survey of households repaying...

1Survey of Households Repaying Multiple Debts – Global Insight

SURVEY OF HOUSEHOLDS SURVEY OF HOUSEHOLDS REPAYING MULTIPLE DEBTSREPAYING MULTIPLE DEBTS

Extracts of a quantitative survey of 1 500 consumersExtracts of a quantitative survey of 1 500 consumerscarried out by Global Insight (France) in July 2008carried out by Global Insight (France) in July 2008

in France, Germany, Portugal, Spain, and the United Kingdomin France, Germany, Portugal, Spain, and the United Kingdom

Objectives of this survey

European households are faced with rising interest rates, decreasing real estate wealth, and inflationary pressures on purchase power. In this context,

Global Insight (France) carried out in July 2008 a syndicated survey on households with multiple debts in five European countries: France, Germany,

Portugal, Spain, and the United Kingdom. The significance of this population for retail banks can not be disregarded: almost 40% of all British

households have several debts, 20% in France, and 20% in Spain. And their specific needs make them a privileged target of every marketing plan.

Our survey explores several dimensions of their behavior and expectations:

How do households with several loans assess and handle their financial situation? How do they assess the evolution of their purchase power? How do they characterize their level of indebtedness? Do they adapt their level of consumption to growing financial constraints? Do they leverage their net wealth in order to maintain their living standards: tapping into their savings, incurring new debts, etc.?

How do these households view and handle credit? What is their present level of debt ownership: Type and quantity of debts? Level of monthly payments? Access to credit? Do they describe credit as a necessity to cope with day-to-day or unexpected expenses, or as an opportunity (e.g. new projects, leisure,

travel, etc.)? How do they conduct their research when choosing a credit provider (determinant attributes, preferred channels, etc.)? How do they handle loan repayment?

How do these households view debt consolidation? Are they aware of the existence of debt-consolidation solutions? What are their views about it? What are the key reasons for considering debt consolidation? Is it to enhance their creditworthiness? To take new loans? To increase their

savings rate? What reduction in monthly payments would entice them to resort to debt consolidation? What type of providers do they favor?

The following presentation summarizes some of the key results of this syndicated survey. For more details about its exhaustive content and price,

please contact our Business Development Executive: Emi Murata (in London - T: +44.207.452.5107, [email protected])

European households are faced with rising interest rates, decreasing real estate wealth, and inflationary pressures on purchase power. In this context,

Global Insight (France) carried out in July 2008 a syndicated survey on households with multiple debts in five European countries: France, Germany,

Portugal, Spain, and the United Kingdom. The significance of this population for retail banks can not be disregarded: almost 40% of all British

households have several debts, 20% in France, and 20% in Spain. And their specific needs make them a privileged target of every marketing plan.

Our survey explores several dimensions of their behavior and expectations:

How do households with several loans assess and handle their financial situation? How do they assess the evolution of their purchase power? How do they characterize their level of indebtedness? Do they adapt their level of consumption to growing financial constraints? Do they leverage their net wealth in order to maintain their living standards: tapping into their savings, incurring new debts, etc.?

How do these households view and handle credit? What is their present level of debt ownership: Type and quantity of debts? Level of monthly payments? Access to credit? Do they describe credit as a necessity to cope with day-to-day or unexpected expenses, or as an opportunity (e.g. new projects, leisure,

travel, etc.)? How do they conduct their research when choosing a credit provider (determinant attributes, preferred channels, etc.)? How do they handle loan repayment?

How do these households view debt consolidation? Are they aware of the existence of debt-consolidation solutions? What are their views about it? What are the key reasons for considering debt consolidation? Is it to enhance their creditworthiness? To take new loans? To increase their

savings rate? What reduction in monthly payments would entice them to resort to debt consolidation? What type of providers do they favor?

The following presentation summarizes some of the key results of this syndicated survey. For more details about its exhaustive content and price,

please contact our Business Development Executive: Emi Murata (in London - T: +44.207.452.5107, [email protected])

mailto:[email protected]

mailto:[email protected]

Survey methodology

Data collection

Online self-completion of the questionnaire. Respondents are part of an international access panel of 2.4 million people managed by a sub-

contractor. They are not polled more than twice a month. Data were collected between July 17th and 28th 2008.

Sample population

A quota sample of 300 people over 18 with multiple sources of debt in each of the five countries: i.e. members of households with one

mortgage and one consumer loan or more, or with no mortgage and two consumer loans or more. On the whole, 1 547 respondents filled in

the entire questionnaire The sample population was built using two criteria - age and revenue.

Control and adjustment of the results

No adjustments of the surveyed population or of the answers were carried out.

Questionnaire

The questionnaire is comprised of 45 close ended questions. Answering the entire questionnaire requires approx. 15 minutes.

Data collection

Online self-completion of the questionnaire. Respondents are part of an international access panel of 2.4 million people managed by a sub-

contractor. They are not polled more than twice a month. Data were collected between July 17th and 28th 2008.

Sample population

A quota sample of 300 people over 18 with multiple sources of debt in each of the five countries: i.e. members of households with one

mortgage and one consumer loan or more, or with no mortgage and two consumer loans or more. On the whole, 1 547 respondents filled in

the entire questionnaire The sample population was built using two criteria - age and revenue.

Control and adjustment of the results

No adjustments of the surveyed population or of the answers were carried out.

Questionnaire

The questionnaire is comprised of 45 close ended questions. Answering the entire questionnaire requires approx. 15 minutes.

Number of respondents sorted by age Number of respondents sorted by monthly revenue of the household

< 2000 euros 2000 - 3000 euros > 3000 euros TotalUK 99 50 163 312France 73 127 107 307Germany 83 101 144 328Portugal 148 86 80 314Spain 118 80 88 286

AGE 18 - 35 35-44 > 45 TotalUK 92 117 103 312France 63 158 86 307Germany 46 155 127 328Portugal 74 141 99 314Spain 87 137 62 286


I. Households with several loans:

Nature and level of debt

I. Households with several loans:

Nature and level of debt

Survey results for France, Germany, Portugal, Spain, and the United Kingdom


1. Nature and level of debt of the surveyed households

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

UK France Germany Portugal Spain

Res

pond

ents

: 1 5

47

Is your household currently paying back a mortgage?

This slide and the next ones explore the characteristics of the surveyed population in terms of number and type of loans currently held. The level of

mortgage ownership is homogeneous from country to country (except for Germany): the proportion of surveyed households who hold a housing

loan ranges from 69% in France to 80% in Portugal. (German households with multiple debts stand out with a markedly lower level: 52.4%). These

results fall into line with the proportion of owners in the overall population of each country (See table below): the lowest proportion is observed in

Germany, and the highest in Spain and Portugal.

This slide and the next ones explore the characteristics of the surveyed population in terms of number and type of loans currently held. The level of

mortgage ownership is homogeneous from country to country (except for Germany): the proportion of surveyed households who hold a housing

loan ranges from 69% in France to 80% in Portugal. (German households with multiple debts stand out with a markedly lower level: 52.4%). These

results fall into line with the proportion of owners in the overall population of each country (See table below): the lowest proportion is observed in

Germany, and the highest in Spain and Portugal.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


Yes No

Owner TenantUK 68,5% 31,5%France 58,3% 41,7%Germany 44,3% 55,7%Portugal 72,9% 27,1%Spain 83,3% 16,7%

Overall population: proportion of homeowners vs. tenants

Source: Eurostat


How many consumer loans (excl. account overdraft) is your household currently paying back?

Res

pond

ents

: 1 5

47

Households with a mortgage Households without mortgage

Our survey encompasses households with multiple debts: hence those who do not hold a mortgage, have at least two ongoing consumer loans.

The chart on the left-hand side details the number of consumer loans held by surveyed households who already hold a mortgage. French households

appear as comparatively conservative: 53% of households with a mortgage hold only one consumer loan. Spanish, Portuguese, and German households

have a higher level of ownership: around 50% of households with a mortgage hold two or three consumer loans. The UK has the highest proportion of

households with four consumer loans or more.

The right-hand side chart provides the same information for surveyed households who do not hold a mortgage. This population is more homogeneous

with around 60% of households in each country holding only two consumer loans. Discrepancies from country to country are limited. British households

stand out however, as more than 10% hold five consumer loans or over.

Our survey encompasses households with multiple debts: hence those who do not hold a mortgage, have at least two ongoing consumer loans.

The chart on the left-hand side details the number of consumer loans held by surveyed households who already hold a mortgage. French households

appear as comparatively conservative: 53% of households with a mortgage hold only one consumer loan. Spanish, Portuguese, and German households

have a higher level of ownership: around 50% of households with a mortgage hold two or three consumer loans. The UK has the highest proportion of

households with four consumer loans or more.

The right-hand side chart provides the same information for surveyed households who do not hold a mortgage. This population is more homogeneous

with around 60% of households in each country holding only two consumer loans. Discrepancies from country to country are limited. British households

stand out however, as more than 10% hold five consumer loans or over.

0

10

20

30

40

50

60

70


1 2 or 3 4 or more

0

10

20

30

40

50

60

70


2 3 or 4 5 and over



On the whole, the population with multiple debts is comprised of three main sub-groups:

1. the ‘1 mortgage and 1 consumer loan’ households who form the most important segment in France and the UK (respectively 37% and 30% of the

surveyed population)

2. the ‘1 mortgage and 2 or 3 consumer loan’ households who form the most important segment in Spain and Portugal (41% in each case)

3. and the ‘no mortgage and 2 or 3 consumer loan’ households who form the most important segment in Germany (41%)

On the whole, the population with multiple debts is comprised of three main sub-groups:

1. the ‘1 mortgage and 1 consumer loan’ households who form the most important segment in France and the UK (respectively 37% and 30% of the

surveyed population)

2. the ‘1 mortgage and 2 or 3 consumer loan’ households who form the most important segment in Spain and Portugal (41% in each case)

3. and the ‘no mortgage and 2 or 3 consumer loan’ households who form the most important segment in Germany (41%)


Overall structure of the surveyed population according to the number and type of loans held

0,0% 20,0% 40,0% 60,0% 80,0% 100,0%

UK

France

Germany

Portugal

Spain

0,0% 20,0% 40,0% 60,0% 80,0% 100,0%

UK

France

Germany

Portugal

Spain

Households with 1 mortgage and 1 consumer loan

Households with 1 mortgage and 2/3 consumer loans

Households with no mortgage and 2/3 consumer loans

Others


II. How do households with several loans

assess the evolution of their financial situation?

II. How do households with several loans

assess the evolution of their financial situation?



0 10 20 30 40 50 60 70 80 90 100

UK

France

Germany

Portugal

Spain

%

Fully bearable Bearable Hardly bearable Unbearable

2. How households with multiple debts assess the evolution in their financial situation

Do you think your purchasing power increased,

decreased, or did not change in the last 12 months?

0 10 20 30 40 50 60 70 80 90 100

UK

France

Germany

Portugal

Spain

%

It increased It did not change It decreased

Res

pond

ents

: 1 5

47

With respect to your present financial situation, do

you consider your monthly loan repayments to be:

The left hand side chart measures customers’ perception of purchasing power evolution in the last 12 months. The outcome ranges from:- very negative (e.g., in Portugal, where 80.3% of surveyed households describe a negative evolution)- to more balanced views (e.g., in the UK where only 54.5% share this opinion).

Interestingly, the perception of purchasing power evolution does not systematically fall into line with the perception of monthly loan repayments. Three

scenarios can be observed: - in France and Germany, households with multiple debts assess the purchase power evolution negatively (left chart), but perceive monthly repayments

as globally bearable (right chart). - British households with multiple debts make a balanced assessment of purchase power evolution and perceive monthly repayments as globally

bearable. - In Portugal and Spain, a strong proportion of households describe monthly installments as hardly/not bearable, while the perception of purchase power

decline is particularly strong in Portugal.

The left hand side chart measures customers’ perception of purchasing power evolution in the last 12 months. The outcome ranges from:- very negative (e.g., in Portugal, where 80.3% of surveyed households describe a negative evolution)- to more balanced views (e.g., in the UK where only 54.5% share this opinion).

Interestingly, the perception of purchasing power evolution does not systematically fall into line with the perception of monthly loan repayments. Three

scenarios can be observed: - in France and Germany, households with multiple debts assess the purchase power evolution negatively (left chart), but perceive monthly repayments

as globally bearable (right chart). - British households with multiple debts make a balanced assessment of purchase power evolution and perceive monthly repayments as globally

bearable. - In Portugal and Spain, a strong proportion of households describe monthly installments as hardly/not bearable, while the perception of purchase power

decline is particularly strong in Portugal.


Proportion of households saying their purchase power declined (%)

20% 30% 40% 50% 60%

50%

60%

70%

80%

GER

FR

UK

ES

PT

Proportion of households saying monthly repayments are hardly / not bearable (%)

90%

This chart summarizes the results of the previous slide as to the relationship between purchasing power evolution and level of monthly installments. Three

group of countries can be defined.

This chart summarizes the results of the previous slide as to the relationship between purchasing power evolution and level of monthly installments. Three

group of countries can be defined.



0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


Yes, it increased Yes, it decreased No, I still pay the same amount each month

Did the monthly payment for your mortgage change

since you took the loan?

Res

pond

ents

: 1 0

87

Households saying monthly repayments are hardly / not bearable (%)

20% 40% 60% 80% 100%

10%

20%

30%

40%

GER

FRUK

ES

PT

Households recording an increase in mortgage repayment since they took the loan (%)

10% 30% 50% 70% 90%

50%

The left-hand side chart illustrates the country-to-country discrepancies in the proportion of mortgage with variable interest rates: the share of surveyed

households who recorded an increase in their mortgage installments ranges from very low levels (France, Germany) to very high ones (Portugal and Spain).

This directly impacts the way households with multiple debts assess their level of monthly payments – as shown on the left-hand side chart: countries with a

high proportion of variable interest rates also have the highest share of households describing their repayment levels as hardly bearable or not bearable.

According to central bank data, the interest rate on housing loans (for an initial rate fixation up to 1 year) increased from 3.5% in December 2005 both in

Spain and Portugal to 5.62% in Portugal and 5.33% in Spain in July 2008.

The left-hand side chart illustrates the country-to-country discrepancies in the proportion of mortgage with variable interest rates: the share of surveyed

households who recorded an increase in their mortgage installments ranges from very low levels (France, Germany) to very high ones (Portugal and Spain).

This directly impacts the way households with multiple debts assess their level of monthly payments – as shown on the left-hand side chart: countries with a

high proportion of variable interest rates also have the highest share of households describing their repayment levels as hardly bearable or not bearable.

According to central bank data, the interest rate on housing loans (for an initial rate fixation up to 1 year) increased from 3.5% in December 2005 both in

Spain and Portugal to 5.62% in Portugal and 5.33% in Spain in July 2008.



III. How do households with several loans

react to the evolution of their financial situation?

III. How do households with several loans

react to the evolution of their financial situation?



0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


I reduced some of my expenses

I finance more expenses with consumer loans

I finance some of my expensesby tapping into my savings

None of these

3. How households with several loans react to the evolution in their financial situation

In the current purchasing power context …:

Res

pond

ents

: 1 3

97.

Spain and The UK are the countries where the perception of a decline in purchase power is the least developed (as seen on slide 9). They hence

record the lowest proportion of surveyed households stating they did reduce some of their expenses (upper left hand side chart).

With respect to savings and debts, customers’ behaviors vary from country to country :

- In France, Germany and the UK, households with multiple debts tap into their savings to support their living standard;

- in Portugal and Spain, surveyed households adopt a more balanced strategy of increased debt and somewhat reduced savings.

Spain and The UK are the countries where the perception of a decline in purchase power is the least developed (as seen on slide 9). They hence

record the lowest proportion of surveyed households stating they did reduce some of their expenses (upper left hand side chart).

With respect to savings and debts, customers’ behaviors vary from country to country :

- In France, Germany and the UK, households with multiple debts tap into their savings to support their living standard;

- in Portugal and Spain, surveyed households adopt a more balanced strategy of increased debt and somewhat reduced savings.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%





None of these

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%





None of these

Proportion of households perceiving a drop in purchase power (%)

50%

60%

70%

80%

GER

FR

UK

ES

PT

Proportion of households who finance more expenses with consumer loans (%)

20%10% 30%


Do you currently wish to lower your monthly

payments? (Consumer loan (s) and/or mortgage?)

Res

pond

ents

: 1 5

47

When reimbursing a loan, have you ever asked

the financial service company:

These two charts help measure how surveyed households wish to manage the loan repayment. A comparison between them shows that customers

willingness to adapt their level of monthly installments increases significantly. There is a greater proportion of households currently willing to lower

repayments than of households who ever asked for it in the past (with the exception of Germany). This gap is particularly striking in Spain and Portugal

where more than 80% of households currently wish to lower their installments but less than 45% ever asked for it. Unsurprisingly, a very high proportion of

Spanish and Portuguese households today describe their monthly payments as hardly / not bearable (See slide 9). In other countries, the gap is less

important but still indicates households’ growing willingness to better shape their repayment strategy.

The left hand side chart also provides details on the purpose for which surveyed households wish to reduce their monthly payments. “Improving the

standard of living” comes first among the stated purposes in each country. Spain and Portugal are further characterized by a strong propensity to save:

“Increasing the level of savings” is mentioned as a key objective by 25% and 27% of surveyed households respectively. In Portugal, this can be traced

back to the very low level of savings of the surveyed population.

These two charts help measure how surveyed households wish to manage the loan repayment. A comparison between them shows that customers

willingness to adapt their level of monthly installments increases significantly. There is a greater proportion of households currently willing to lower

repayments than of households who ever asked for it in the past (with the exception of Germany). This gap is particularly striking in Spain and Portugal

where more than 80% of households currently wish to lower their installments but less than 45% ever asked for it. Unsurprisingly, a very high proportion of

Spanish and Portuguese households today describe their monthly payments as hardly / not bearable (See slide 9). In other countries, the gap is less

important but still indicates households’ growing willingness to better shape their repayment strategy.

The left hand side chart also provides details on the purpose for which surveyed households wish to reduce their monthly payments. “Improving the

standard of living” comes first among the stated purposes in each country. Spain and Portugal are further characterized by a strong propensity to save:

“Increasing the level of savings” is mentioned as a key objective by 25% and 27% of surveyed households respectively. In Portugal, this can be traced

back to the very low level of savings of the surveyed population.

0 10 20 30 40 50 60 70 80 90 100 110

UK

France

Germany

Portugal

Spain

%

to reduce your monthly payments to postpone one monthly payment

to increase your monthly payments none of these

0 10 20 30 40 50 60 70 80 90 100

UK

France

Germany

Portugal

Spain

%

Yes, in order to improve your standard of living

Yes, in order to finance new projects

Yes, in order to increase your savings

No, the current level of monthly payments is convenient for me



Two diverging scenarios can be seen on this chart:

In France, Germany and the UK, the financial stress caused by monthly loan repayments is less acute to surveyed households than in Portugal and Spain. In

these three countries, lending with variable interest rate is less frequent and monthly payments are lower both in absolute terms and as a proportion of

households revenues. However, in a context of economic turmoil, French, German and British households prove very cautious when it comes to taking new

debts: less than 10% of them resort to it as a way of financing new expenses. (In fact, as a closer look into households’ answers shows, they increasingly

resort to minor forms of credit such as deferred payments, and payments in installments).

On the other hand, monthly installments represent a heavy financial burden for households with multiple debts in Portugal and Spain: respectively 55% and

66% of them wish to reduce them to improve lifestyle or finance new projects. Contrary to their French, British or German counterparts, they do not shy away

from credit in a context of economic uncertainties: 25% of them finance more expenses with consumer loans.

Two diverging scenarios can be seen on this chart:

In France, Germany and the UK, the financial stress caused by monthly loan repayments is less acute to surveyed households than in Portugal and Spain. In

these three countries, lending with variable interest rate is less frequent and monthly payments are lower both in absolute terms and as a proportion of

households revenues. However, in a context of economic turmoil, French, German and British households prove very cautious when it comes to taking new

debts: less than 10% of them resort to it as a way of financing new expenses. (In fact, as a closer look into households’ answers shows, they increasingly

resort to minor forms of credit such as deferred payments, and payments in installments).

On the other hand, monthly installments represent a heavy financial burden for households with multiple debts in Portugal and Spain: respectively 55% and

66% of them wish to reduce them to improve lifestyle or finance new projects. Contrary to their French, British or German counterparts, they do not shy away

from credit in a context of economic uncertainties: 25% of them finance more expenses with consumer loans.

Households financing more expenses with consumer loans (%)

10%

20%

30%

GER

FRUK

ES PT

Households wishing to reduce monthly payments in order to improve lifestyle or finance new projects (%)

30% 40% 50% 60% 70%

FR



IV. How do households with several loans

view debt consolidation?


Res

pond

ents

: 1

547

0 20 40 60 80 100

UK

France

Germany

Portugal

Spain

No

Yes

Res

pond

ents

: 1

316

4. Debt consolidation

Is debt consolidation of interest to you?

The left hand side chart helps assess the market potential for debt consolidation solutions in the five surveyed countries:- The UK stands out with the lowest level of customer interest for these solutions. - On the other end of the spectrum, Portugal and Germany are the most promising markets thanks to a very a strong customer appetite for debt

consolidation. - France and Spain stand in-between: a close majority of households are not interested by debt consolidation, still leaving room for significant market

development.

The right hand side chart indicates the level of market maturity - i.e. the proportion of households who already applied for a loan to pay off either one other

loan or several others. The first case (repayment of one single loan by means of a new one) can not be considered debt consolidation in the strict sense.

British and German frequently resort to it, notably to repay a revolving credit or an account overdraft. The UK also has the lead as to the proportion of

households having already resorted to ‘true’ debt consolidation, i.e. repayment of several loans by means of a new one.

The left hand side chart helps assess the market potential for debt consolidation solutions in the five surveyed countries:- The UK stands out with the lowest level of customer interest for these solutions. - On the other end of the spectrum, Portugal and Germany are the most promising markets thanks to a very a strong customer appetite for debt

consolidation. - France and Spain stand in-between: a close majority of households are not interested by debt consolidation, still leaving room for significant market

development.

The right hand side chart indicates the level of market maturity - i.e. the proportion of households who already applied for a loan to pay off either one other

loan or several others. The first case (repayment of one single loan by means of a new one) can not be considered debt consolidation in the strict sense.

British and German frequently resort to it, notably to repay a revolving credit or an account overdraft. The UK also has the lead as to the proportion of

households having already resorted to ‘true’ debt consolidation, i.e. repayment of several loans by means of a new one.

Did you ever apply for a loanto pay off another one (or more)?

0 10 20 30 40 50 60 70 80 90 100

UK

France

Germany

Portugal

Spain

%

Yes, in order to pay off one ongoing loan

Yes, in order to pay off several ongoing loans

No, you've never asked for such a loan

No, the financial service company refused to grant you this type of loan

1 survey of households repaying multiple debts – global insight survey of households repaying...

Documents

survey european households

british households

syndicated survey

new debts

global insight france

quantitative survey

quantity of debts

multiple debts extracts