Nordea survey: Finnish households have weak risk tolerance

print this

According to a recent telephone survey commissioned by Nordea Bank, two out of three Finnish households are worried about a rise in energy and petrol prices more than about a rise in food prices, income taxes, or an increase in interest costs.
     
Households' attitudes towards various changes in financial conditions and their ability to deal with the changes were studied in a Nordic survey called Household Pulse. More than one thousand Finns aged between 25 and 65 were interviewed for the survey around mid-September.
      People living in detached houses in thinly populated regions are more often worried about a rise in energy and petrol prices, while families with several children and those with low incomes worry about food prices most.
      On the other hand, some 22 per cent of the respondents have savings of less than EUR 500 in the bank, while the savings of four out of ten interviewees are smaller than their monthly salary.
      Moreover, around nine per cent of those questioned said that after paying the necessary expenses they have no money left, while almost as many people reported that they have less than EUR 100 available for optional expenses.
     
These households have clearly weaker risk tolerance than others, says economist Tarja Svartström from Nordea.
      Nearly 25 per cent of households with housing loans report they could tolerate a maximum rise of EUR 50 per month in interest costs, while one in five households would be able to bear a rise of EUR 50 to 100.
      In spite of all this, the Finnish households have a strong belief in the development of their own finances. This can be seen in the sales figures of the retail trade sector.
      Retail sales (excluding car sales figures) grew by 4.7 per cent during the first months of the year when compared with 2005. The demand for white goods and domestic appliances increased by as much as 16 per cent.
     
The banks recommend that those households with housing loans should be prepared for the possibility of a rise in interest rates by a couple of percentage points.
      However, Finns should bear in mind that in addition to a rise in interest rates, there are even bigger risks lurking, such as an unexpected repair bill, unemployment, divorce, and occupational disability, among others, says Bank Manager Pekka Luukkanen from Nordea. Therefore, households should take certain precautions and possibly seek professional advice.
      At least those living in owner-occupied homes should have a savings buffer corresponding to at least one or two months' salary, Tarja Svartström concludes.


Links:
  Nordea survey: A rise in energy prices worries households more than a rise in loan interests

Helsingin Sanomat