Guarding against economic downturns when getting a home loan

Eliza Buglar

Oct 12, 2021

Overall economic trends can be a difficult thing to predict, especially given how complex they are and how many factors can be of influence. Things such as wages, interest rates, inflation, and Government activity can all impact economic trends, and that’s just the tip of the iceberg.

That doesn’t include major global disruptions, such as the COVID-19 pandemic, which quickly became the centre of most conversations around the world. People didn’t know what to expect, and now that we’re in the thick of it, experts are still unable to predict what could happen to the world’s finances.

For instance, few people would have predicted personal equity going up during a global pandemic. However, despite unemployment rates climbing in the early days and many people staying home, that’s exactly what has happened. With fewer people out and about and willing to spend their cash for fear of what could come next, savings are going up in many nations around the world.

Unexpected changes such as these show why it’s so important to prepare yourself financially when it comes to your home loan. Just as unexpectedly as interest rates can drop, they can also rise, too. If that happens, you don’t want to be in a position where you can’t afford to meet required repayments on your mortgage.

Thankfully, lenders and banks apply a buffer when they are estimating home loan repayments, which means they assess whether you could afford to make higher repayments if interest rates were to rise during the life of your loan. But this is only a buffer, and the reality is that rates are largely unpredictable and can go beyond what buffer was used when you initially applied for a loan.

In instances such as these, Compare the Market can be a useful reference. Our Home Loan Specialists are available to help you look for a home loan that suits your circumstances. In some cases, you could be in a position to find a home loan with a more enticing offer than one you are on currently, and we make the switch for Australian homeowners seamless.

However, we know that interest rates and personal financial situations don’t only fluctuate in the confines of our country. That’s why as experts in home loans, we wanted to know if the pandemic made a significant difference in household wealth in other nations, too.

In order to do that, we first need to understand what net wealth (or net worth) is. According to the Organisation for Economic Co-operation and Development (OECD), a household’s financial net worth consists of their total financial assets minus their financial liabilities. Financial assets include the things that a household owns, like equity and investment shares, while liabilities are those things they owe (e.g. loans).

Using the Household net worth statistics indicator on the OECD Data website, we took a deeper look into how the net worth of households in 20 countries has changed over the last five years, particularly between 2019 and 2020. Here’s what we found.

1. South Korea – 19% increase

South Korea experienced the biggest change in household net wealth from 2019 to 2020 out of all the nations we looked at. With a 19% increase, household wealth grew from US$46,810.10 in 2019 to $55,675.78 the following year. 2020 was the first year from our analysis where the figure exceeded $50,000.

The only time that household wealth decreased from 2015 to 2020, was in 2018, where it dropped to $43,521.61 from $44,189.57 the year prior.

2. Denmark – 18% increase

Falling just shy of South Korea’s impressive figure, Denmark landed in second place in our analysis with an 18% increase from pre-pandemic to early-pandemic times.

Across the five years studied, Denmark experienced a mostly upwards trend, except for 2018 where household wealth dropped to $122,437.50 from $125,431.10 the year prior. It was a relatively small change, considering the following two years saw immense growth. There was more than a $20,000 increase between 2018 and 2019, which grew another almost $30,000 to sit at a whopping $171,386.80 in 2020.

3. Poland – 16% increase

Rounding out the top three on our podium is Poland, which experienced a 16% increase over the final two years of the analysis. Unlike South Korea and Denmark, Poland had a consistent upwards trend from 2015 all the way through to 2020.

In the lead up to the beginning of the pandemic, the nation saw an increase from $21,521.84 in 2019 to $24,948.11 in 2020.

1. Chile – 2% decrease

Of all the nations we looked at, Chile experienced the smallest change in household net worth – in fact, they suffered a decrease! They were one of only two nations out of the 20 that we looked at to have rolled backwards.

In order to provide some context, it’s important to know what was happening in the years prior. From 2015 through to 2019, Chile was in a consistent upwards trend. While there was little change in some years, namely from 2017 to 2018, positive growth remained year after year.

The drop from 2019 to 2020 was the first decrease the nation had seen during this period. Household net wealth dropped just two per cent from $36,426.50 in the lead up to the pandemic, to $35,607.32 in 2020.

2. Spain – 1% decrease

Alongside Chile, Spain was the only other nation to experience a decrease in household net wealth when the pandemic first hit. However, the drop was much less significant and was only a difference of a few hundred dollars.

In 2019, Spain’s household net wealth sat at $54,623.15, which dropped marginally in 2020 to sit at $54,252.78.

The only other time there was a decrease year-on-year across the five years included in the analysis was between 2017 and 2018, where again, there was a change of just a few hundred dollars.

3. Portugal – 4% increase

From 2015 onwards, Portugal was on a consistent upwards trend when it came to their household net wealth. In 2015, this figure sat at $37,085.15, which in 2017 rose to more than $40,000. This trend continued all the way through to 2020, where there was a 4% increase from the year prior, landing the nation on a value of $48,540.63, compared to $46,464.13 the year prior.


We extracted data on household net worth per capita from the OECD Household net worth indicator for the years 2015-2020. Where a country didn’t have 2020 data available, it was excluded from our final list. We then used a spreadsheet calculator to determine the year-on-year difference of household net worth between 2019 and 2020 and presented it as a percentage.


OECD (2021), Household net worth (indicator). doi: 10.1787/2cc2469a-en (Accessed on 03 August 2021)

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