The rate of increase in South Korean households’ liabilities was 7.8 times the OECD average in the period from 2009 to 2016.
According to the Bank of Korea, the rates were 3.1 vs. 0.4 percentage points during the period. This means household debts and incomes rose at similar speeds in OECD member countries unlike in South Korea.
In the meantime, South Korean households’ debt-to-disposable income ratio rose from 159.8% to 161.1% between the end of last year and the end of the second quarter of this year. During the period, the ratio of their liabilities to the country’s nominal GDP increased from 83.8% to 84.8%. When it comes to these two indices at the end of 2016, South Korea ranked eighth and seventh in the OECD, respectively.
High-income earners in the top 30% group accounted for 64.1% of borrowers. In addition, those with the highest to third-highest credit ratings represented 69.7% of all borrowers.
As far as bank mortgage loans are concerned, which took the largest part of the household debts, the ratio of fixed interest rate loans continuously rose from 23.6% to 44.5% from 2014 to last year. The ratio of installment payment loans increased from 26.5% to 49.8% during the same period.