Colombian Households’ Debt Trends Show Growing Confidence in Credit and Responsible Management
Hernando José Gómez, president of the Colombian Banking Association and Financial Institutions (Asobancaria), outlined the current financial landscape for Colombian households. Field results indicate that Colombians are handling their debts with discipline and care.
Gómez highlighted notable growth in consumer and home loan portfolios, with increases of 12.8% and 12.7% respectively. Payments on these loans also surged, rising by more than 50% year over year. This momentum continued through the end of the previous year, despite challenging conditions.
Even amid the Covid-19 crisis, credit flowed to meet household needs. In 2021, the repayment levels for consumer and home loans surpassed pre-pandemic levels, and default indicators improved as a result of a culture of timely payments among Colombians.
One key takeaway is that defaults on both consumer and housing loans remained below pre-pandemic levels. The non-performing loan rate for consumer credit reached 4.4% of the total portfolio, close to 4.7% in December 2019. For housing loans, the default indicator ended 2021 at 5.7%, down from 6.8% in December 2019.
Analysts note that the share of household income allocated to debt service—often referred to as the financial burden—has hovered around 30%. This is significantly lower than alarm levels of earlier years and well below the OECD average in many cases, suggesting a healthier debt posture among households.
In closing, Gómez proposed several recommendations to sustain healthy borrowing practices. He emphasized keeping the financial burden under 40%, relying on official credit institutions to minimize lender risk, and comparing multiple market options to find the best fit. He also urged borrowers to honor obligations to avoid falling into guilt or arrears.
Source: Lare Publica