Who is borrowing – for what – and can they afford it?

Abstract

New micro data enable us to analyse household debt behaviour through 2006. We can identify households that borrow net and households that repay debt. Half the households in the sample increased their debt in 2006. Most new loans were small, but gross debt growth is dominated by a relatively small number of large loans. Loans are mainly given to households with sufficient debt-servicing ability, but many households take on as much debt as they can bear. The data provide information on developments in banks’ credit risk in relation to household loans through 2006.