The household credit market after five years of crisis: evidence from the survey on income and wealth

Half a decade of crisis has had a substantial impact on the market for credit to Italian households. From 2008 through 2012 the share of indebted households decreased by 4 percentage points, to 23 per cent; among young households it fell by 12 points. The decline involved consumer credit and occurred between 2010 and 2012. Overall, the share of households with mortgage loans did not change; however, it fell among low-income households and increased among those in the third quartile of income. The demand for loans decreased sharply except among young households. The reduction in indebtedness was due to the drastic tightening of credit supply conditions in the period. The indicators of debt sustainability, in particular the ratio of debt to income, began to worsen in 2010; for mortgage credit the decline has involved households headed by self-employed workers and those in the third income quartile. For these households, repayment arrears have increased; arrears are more frequent for mortgages granted before the crisis. The share of households with high debt service and below-median income is about the same as in 2008, and our simulations suggest that it will change only slightly in 2014-2015.