At first glance it seems paradoxical: over-indebtedness among Munich consumers fell again last year. The Creditreform debtor atlas still shows 92,058 Munich residents as over-indebted at the end of 2022, around 6,400 fewer than a year earlier. At 7.4 percent, Munich’s over-indebtedness rate is at its lowest level for more than 15 years.
“The pandemic acted as a catalyst for a completely unexpected effect,” explained Philipp Ganzmüller, Managing Director of Creditreform Munich, when the figures were presented in the press club. “During the Corona period, consumers consumed less and thus avoided processes of over-indebtedness.” However, the “multiple crises” such as the Ukraine war, the explosion in energy prices and inflation “have not yet led to upheavals,” said Ganzmüller, and their effects will only be felt in the longer term. For the current year he predicted a reversal of the trend: “Over-indebtedness will increase again.”
In 2021, the debtor ratio in the state capital fell by 0.9 percentage points, and in 2022 by another 0.5 percentage points. “The bad news at the beginning of the pandemic did not come true,” admitted Ganzmüller. Consumers acted very sensibly during the pandemic, “they were not allowed and did not want to consume”, put their savings into reducing over-indebtedness, and there was government aid of unimagined proportions. On the other hand, the massive energy price explosion and the additional financial burdens would have had hardly any impact on the over-indebtedness situation, at least until the end of 2022. For Ganzmüller, however, this is no reason to give the all-clear.
It is worrying that the price increases are very drastic and are also causing distress for the middle class. High inflation is threatening the ability of many consumers to pay, and real incomes have fallen significantly in 2022. Ganzmüller therefore expects that over-indebtedness will rise again to more than 100,000 people affected. It is not yet foreseeable how the energy price brake will affect it, which costs an incredible amount of money, but is certainly indicated. Ganzmüller assumes that the “surcharge shock” for energy and heating costs is yet to come, especially since no higher advance payments have been made so far. Many consumers could get into payment difficulties as a result.
Men are traditionally twice as indebted as women
In addition, there would also be higher prices from service providers, who in turn would pass on the increase in their costs. Therefore, “despite the gas price brake, there will be a problematic phase because other costs will also increase”. That puts a lot of people in trouble. Ganzmüller rated positively that the economy and job market are proving to be much more robust than expected. Unemployment is one of the main risks of over-indebtedness. “As long as the people stay in wages and bread, the situation is good.”
With a debtor ratio of 7.4 percent – the peak was in 2007 at ten percent – Munich performs better than the national average (8.5 percent), but worse than Bavaria (6.1 percent). “The cities remain the focal point of the over-indebtedness situation,” emphasizes Ganzmüller. At 3.6 percent, Eichstätt is the district with the lowest debtor ratio in Bavaria. The explanation for this is simplified: “Audi lives there.” The negative leader is Hof with 13.4 percent, a city that is suffering greatly from structural change.
In Munich, the debtor ratio has decreased significantly in all districts over the past year. The rate in the old town has fallen the most, by 1.2 percentage points. However, with 12.6 percent, the district remains the leader, as in previous years. Closely followed by Am Hart (11.9 percent), Ramersdorf (11.1 percent) and Milbertshofen (10.3 percent). The experts are also surprised why the old town has had the highest rate for years. “It’s mainly the elderly who still live here,” guessed Ganzmüller. They in particular are over-indebted in Munich. Obermenzing continues to have the lowest debtor rate of all districts (4.1 percent).
There are hardly any changes in the gender distribution either. “Men are traditionally twice as indebted as women,” explained Ganzmüller, “but women are catching up”. The rate for Munich men is 9.6 percent and for women 4.8 percent.
More than 100,000 people in Munich receive state social benefits, said Marc Wichlajew, head of the city’s debt and insolvency advice. Every sixth person lives below the poverty line, a total of 266,000 people are affected. Over-indebtedness is greatest in those quarters where poverty is also above average. Single parents, families with three or more children, people with disabilities and the elderly are particularly affected by poverty. Since 2016, the number of people receiving basic security in old age has increased by 2,500 to 17,000.
Even if the over-indebtedness figures fell in 2022, the experts from the debt advice service expected an increase this year. The inquiries are more complex and existentially threatening, the “uncertainty among those seeking advice is very great,” said Wichlajew, which is why many issues are being postponed.