Household Debt Hits Another Record High in Q2... 1,637.3 Trillion Won

Housing Mortgage Loans Increase by 14.8 Trillion Won, Credit Loans Rise by 9 Trillion Won

[Image source=Yonhap News]

[Asia Economy Reporter Kim Eun-byeol] Household debt from loans and card usage reached 1,637.3 trillion won as of the end of June, setting a new record high.

According to the 'Household Credit (Provisional) as of the end of Q2 2020' statistics released by the Bank of Korea on the 19th, the household credit balance at the end of Q2 stood at 1,637.3 trillion won, an increase of 25.9 trillion won compared to the end of the previous quarter. This is the highest household credit balance since the statistics began in Q4 2002.

The increase is more than double that of Q1 (11.1 trillion won) and is similar to the level seen in Q4 last year (27.8 trillion won).

Household credit refers to the comprehensive household debt (liabilities), which includes loans from banks, insurance companies, lending companies, public financial institutions, as well as pre-payment card usage amounts (sales credit).

Excluding sales credit, the household loan balance was 1,545.7 trillion won, up 23.9 trillion won from the end of the previous quarter. This is also a record high, and the Q2 increase (23.9 trillion won) is the largest in two and a half years since Q4 2017 (28.7 trillion won).

Among household loans, mortgage loans increased by 14.8 trillion won from Q1 to reach 873 trillion won. Although the increase is smaller than Q1 (15.3 trillion won), it is nearly double the amount in Q2 last year (8.4 trillion won).

Other loans, including unsecured loans, with a balance of 672.7 trillion won, also rose by 9.1 trillion won in Q2. Although this increase does not reach the Q4 last year level (10.5 trillion won), it is four times higher than Q1 (1.9 trillion won).

Looking at household loan changes by financial institution, compared to the end of Q1, loans at deposit banks increased by 14.4 trillion won, and loans at other financial institutions increased by 9.3 trillion won. Non-bank deposit-taking institutions increased by only 200 billion won.

A Bank of Korea official explained, "Household loans at deposit banks increased mainly due to mortgage loans, and the increase in loans from other financial institutions such as insurance companies, pension funds, and credit specialized companies was driven by other loans."

The sales credit balance in Q2 was 91.6 trillion won, increasing by 2 trillion won from credit card companies and credit specialized companies (1.9 trillion won). Compared to the 6.1 trillion won decrease in Q1 due to consumption contraction caused by the COVID-19 pandemic, this indicates a partial recovery in card consumption in Q2.

This content was produced with the assistance of AI translation services.