De Jong attributes the renovation loan to the fact that the housing market is under pressure and people are staying where they are due to high house prices. Instead of buying a suitable new home, many people choose to renovate their existing home. And in terms of cars: although fewer cars were sold last year, they have become much more expensive. “So maybe there was a need to borrow more.”
The fact that people build up a debt position in times of inflation is a story that, according to De Jong, has two sides. On the one hand, people become vulnerable, on the other, the willingness to borrow is a sign of confidence in the future, “and stimulates spending”.
“People quickly think that higher debts are all bad, but of course there are good sides too”
Bank of the First Republic
Across the Atlantic, meanwhile, a medium-sized bank is in danger of failing for the third time, this time the First Republic Bank. De Jong calls it extraordinary. “First Republic Bank is comparable to Silicon Valley Bank. Which has a comparable scope, and probably also similar problems: suffering substantial losses on the bond portfolio due to interest rate hikes.’
According to De Jong, these kinds of problems are probably limited to banks of this size, which does not mean that the United States does not have many such banks. However, De Jong does not think that we are on the verge of a period of great financial instability.