Marcus Lindblad is Country Manager at Financer.com Sweden, a comparison site for finance and loans. We are interviewing him about the Swedish borrowing habits, alternative investments, the Riksbank’s (the central bank of Sweden) unwillingness to raise interest rates, and the Swedish economy.
Marcus, we are in a situation where many countries have a negative interest rate, this reduces the scope of what the Riksbank can do in case of a possible economic downturn. The US raised the interest rate a month ago, and many believe the Riksbank would follow suit on Wednesday. But they did not do so. Why do you think that the Riksbank keeps the interest rate down?
I think they are waiting. Partly because of inflation, as the Stefan Ingves (Head of Riksbank) states, but also in part because there are so many conflicts brewing in the world. We are currently in an economic boom i Sweden and Swedes have high debt. If you make a rash decision to increase the interest rate, consumption would slow and inflation stagnate. For this reason they want to increase the interest rate carefully and very slowly.
How high interest do you think the Swedish people can handle? Sweden is a rich land with a “poor populace”, in the sense that Swedes have a very high net debt per capita.
In many surveys conducted by banks and companies, the tendency we see is that every other Swede could cope with increased living costs of a maximum of 2,000 SEK per month. Thus a small increase in the interest rate will have severe consequences. Therefore it is advisable for the heavily indebted Swedes to budget for an increased interest rate, which will probably happen in between December and February.
Many experts and politicians agree that the interest rate deductions needs to be reduced over time, and removed completely in the long run. However, this is not a policy that wins elections. There is also a difficult parliamentary situation right now in Sweden which is unlikely to create a stable government. Do you think that taking the opportunity to make a cross coalition agreement on interest deductions when/if a new government is formed?
Interest deductions will have a very big impact on the Swedish economy. I absolutely believe it will be a cross coalition decision to reduce or abolish interest deductions. The last time we saw this was in relation to the new Consumer Credit Act where the nominal interest for payday loans was raised. Somewhat interesting is that the only party opposed to this was the Swedish Democrats.
[Note: Swedish Democrats is an extreme right wing party in Sweden.]
Financer.com in the world
Financer exists in 26 countries, for example Sweden and the US, but you are currently not operating in the United Kingdom which is the largest market for payday loans in Europe. Why is that? What parameters do you use in deciding which markets to enter?
That is correct. We have looked at the United Kingdom and are very interested to enter that market. One of the reasons we have yet to do so, is because it requires a local presence and a license from the FCA. Proper resources and planning is necessary to do this. More than that I cannot say. 🙂
Essentially, what Financer does is to pass visitors to other lenders. You are most famous for comparing loans, and you also do it globally in all markets. Do you have any insight into how loan volumes and types differ between countries?
Loans and loan volumes are usually the same in different countries. What is most different between countries and regions is the regulation of interest rates and fees. It is noteworthy that in Sweden and Europe payday loans are usually regulated through a cap on interest rates. But in the US, for example, each state has their own regulation which makes it possible for companies to have incredibly high interest rates. On the other hand, loans for businesses are marginally cheaper in the US compared to Sweden.
Your strongest and most popular function on Financer is your loan comparison. From a consumer perspective, do you see any upcoming changes here? What is it that most people are after and want to compare?
We have seen an increased demand for services that avoid triggering credit reports that banks can see. People in general wants to be anonymous when it comes to loans, and that they should not influence their private finances. These types of personal loans with low credit scores often use different methods of credit assessment than traditional loans. This also means that there is a lower consumer demand on competitive interest rates.
In uncertain times with falling stock markets, people tend to look for gold. Unlike regular currencies, countries cannot push gold into the economy in order to fire it up. Just look at how the US has been printing new money the last couple of years. Bitcoin has in this regard a similar character as gold. What do you think about Bitcoin in this regard?
Bitcoin and other crypto currencies are clearly interesting investment opportunities. However, the price is extremely volatile I would not back a store of value. The reason is that you must be very conscientious about security when you store these. Furthermore, in order to ensure it is not a scam you must ensure you are well read up on the currency. I have invested myself in Bitcoin and other currencies, but this is money I am ready to lose. For this reason I have no expectation of any kind of return on investment.
Something I have been looking at myself, and even invested in, recently is alternative investments. For example, consumer and business credit — so called p2p lending. This is a place where you can diversify yourself in relation to the stock market, while getting a transparent view into how the investments fare. It has very good return of investment. This is clearly a more stable investment than crypto currencies. You can sleep well at night, which you cannot when dealing with crypto currencies.
We thank Marcus Lindblad for these insightful word.