Surge in Pawnshop Lending in Sweden Driven by Rising Gold Prices
Pawnshop lending in Sweden spikes due to rising gold prices and economic hardship.
Key Points
- • Pawnshop lending increased by 28% in H1 2023 compared to 2022.
- • 86,000 loans were issued, a 12% increase from last year.
- • Women represent a higher percentage of borrowers, often due to gold ownership.
- • Gold remains the most common collateral, although fashion items are gaining popularity.
Pawnshop lending in Sweden has witnessed a notable surge in activity during the first half of 2023, largely attributed to increasing gold prices and challenging economic conditions faced by many households. Reports indicate that total loans issued by Pantbanken Sverige have increased by 28% compared to the same period in 2022, amassing over 900 million SEK in lending volume. This equates to a total of 86,000 loans, marking a 12% increase year-on-year, according to CEO Peter Sundström.
The uptick in pawn loans appears to encompass customers from various demographics, though there is a notable trend of a higher borrowing rate among women. This has been speculated to be partially due to the fact that women tend to own more gold, which serves as a popular form of collateral. According to Sundström, about 85% of borrowers reclaim their pledged items, highlighting the intended temporary nature of these loans.
While traditional gold items remain the mainstay for pawnbroking, there has been an emerging trend where fashion accessories, particularly luxury handbags, are increasingly being used as collateral. Nevertheless, gold retains its status as the most common item pawned, with many customers opting to borrow against inherited gold jewelry.
Typically, loans at pawnbrokers like Pantbanken are structured to last for four months, although customers have up to six months to redeem their items. Should items not be reclaimed, they are subsequently sold at auction or in the shop, with any surplus after loan repayment and fees returned to the customers. Currently, there are about 20 pawnshop businesses operating within Sweden, with Pantbanken Sverige and Sefina pantbank being the most prominent players in the market.
As the economic landscape continues to impose pressures on households, the increased activity in pawnshop lending could be indicative of broader financial trends, fueling a reliance on alternative forms of credit amid rising living costs and inflation.