Decline in people’s intentions to borrow credits

Fewer and fewer Bulgarians intend to borrow credits or buy goods on lease contracts in the near future, showed data from the most recent nationally representative survey of BBSS Gallup International, commissioned by Klassa daily.

The uncertainty of the labour market as a result of the economic crisis led to a serious decrease in consumer credits and lease contracts due to the banks’ tighter terms for approval of candidate borrowers and the consumers' own fears about their eventual capability to service their due instalments. In addition to the anxieties of Bulgarians and the financial institutions, came the news of an increase in the share of bad debts, spread by the media some days ago.

The data from the survey shows a persistent downward trend in the number of people who are repaying loans and goods purchased on lease, as well as the share of those who intend to apply for a loan in the near future.

In 2008, shortly before the economic crisis began in Bulgaria, one in four adult Bulgarians said that either he/she personally or their family had borrowed money from a financial institution. This percentage has been constantly declining over the last three years and has reached its lowest level - 15%. The share of credit institutions’ clients is greater among more solvent people – those with average and above the average incomes, university graduates and the so-called modern Bulgarians (those who speak foreign languages, travel frequently and regularly use the Internet).

There is also a decline in the use of services offering the purchase of goods on lease. Before the economic crisis began, buying goods on lease became an increasingly popular practice because of its convenience and relatively moderate interest rates. The crisis, however, did not leave unaffected this aspect of consumer behaviour and the share of Bulgarians who have purchased something on lease is 5%, or twice lower than in 2008.

Despite the signals of a recovery of the economic situation in the country, Bulgarians' intentions to use credits are at the lowest level in recent years. Practically, an almost negligible percentage of the population is planning to apply for financing – either a consumer credit or some other kind of a loan or lease - in the next six months. In 2008,  some 7% of our fellow countrymen intended to draw a credit, but their share has dropped to 1%. At the same time, merely three out of 100 polled Bulgarians said they intended to purchase goods on lease in the next half year.

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