Ballooning Household Debt
The nation’s household debt has already exceeded 1 quadrillion won, or 1,000 trillion won (US$935 billion).
According to data on commercial banks and savings institutions’ loans to households released by the Bank of Korea on January 7, balances on loans to households equaled 681.1 trillion won (US$636.8 billion) as of November 2013, an increase of 5 trillion won (US$4.7 billion) from the previous month.
Loans to households from commercial banks and savings institutions decreased from 659.9 trillion won (US$617 billion) in December 2012 to 654.4 trillion won (US$611 billion) in February 2013. However, the upward trend started in March. Since May 2013, the monthly figure for loans exceeded the prior record. As of September of last year, the total household indebtedness (financial institutions’ loans and credit card debt included), amounted to 991.7 trillion won (US$927.2 billion). From October to November 2013, financial institutions’ loans increased by 9 trillion won (US$8.4 billion).
Household balances show the level of household indebtedness, which is calculated on a quarterly basis, by including loans from financial institutions, cash advances, and credit-card spending.
Hyundai Research Institute economist Lee Jun-hyup said, “Loans initiated by government policy such as home loans for first-time buyers and shared-type mortgages are big, and they are increasing.” He added, “I think that overall household debt definitely surpassed 1,000 trillion as of late December of last year.”