South Korea’s household debt surpassed 1,460 trillion won (US$1.35 trillion) in the first quarter, reaching a record high. Although the growth of household debts has slowed for the fifth straight quarter, it still increases at a faster pace than that of household income.
According to a report titled “2018 Q1 Household Credits Outstanding” released by the Bank of Korea on May 23, thecountry’s outstanding household debt came to 1,468 trillion won (US$1.36 trillion) in the January-March period in 2018, up 17.2 trillion won (US$15.93 billion) from the previous quarter.
Outstanding household debts consist of household loans received from various financial institutions, such as banks and savings banks, and credit card spending. The growth significantly declined compared witha 31.6 trillion won (US$29.25 billion) expansion in the previous three-month period. The on-year growth rate stood at 8 percent and has maintained a single digit growth since the third quarter last year. The increase of household debts has slowed for the fifth straight quarter since the fourth quarter of 2016.
However, the increase rate of household credit is still higher than that of household income, putting more pressure on households. The increase rate of quarterly disposable income remained at some 3 to 5 percent from 2015 to 2017.
The amount of household loans in the first quarter surged 16.9 trillion won (US$15.65 billion) from the end of the previous quarter. The figure dramatically decreased from 28.8 trillion won (US$26.68 billion) of the increase at the previous quarter. This is largely due to the fact that both deposit banks and non-banking depository institutions gave out less mortgage loans as the government tightened lending rules as part of its effort to curb ever-growing household debts.