[Exclusive] BOK to Analyze Household Loans by Real Estate Holding Status

Internal Analysis Since Early This Year... Announcement Possible Within the Year

View of downtown apartment complexes from Namsan, Seoul. [Image source=Yonhap News]

[Asia Economy Reporter Kim Eunbyeol] "Did people who own houses increase their loans more?"

The Bank of Korea is analyzing how much households have increased their loans based on their real estate ownership status and plans to announce the results as early as this year. Until now, there has never been an announcement on household loan status according to real estate ownership. This analysis will help determine whether many people who already own houses took out loans for gap investment (buying a house with a jeonse lease) or if more people increased loans to purchase homes, which will assist the government in formulating more rational policies.

According to officials from the Bank of Korea's Economic Statistics Department on the 26th, the Bank has been working since early this year to add borrowers' real estate ownership information to the household debt database (DB). The real estate ownership data was received from the Ministry of Land, Infrastructure and Transport through intermediary agencies such as credit rating companies. A Bank of Korea official stated, "Since this is the initial stage, we plan to first analyze household loan status by broadly dividing people into two groups: those who own real estate and those who do not."

Once the consistency of the household debt DB, including real estate data, is confirmed, it is expected that more detailed analyses of household loan status will be possible, such as categorizing owned real estate by price. The household debt DB, which includes the real estate ownership status secured so far, contains about 2 to 3 years of data, and the Bank plans to review the figures extracted during an internal meeting in September.

The Bank of Korea's household debt DB was created by benchmarking the Consumer Credit Panel of the Federal Reserve Bank of New York. Each quarter, credit information on over one million people is received from NICE Information Service and processed into the DB. Until now, the analysis of household debt has been limited to individual unique characteristics, financial transaction information, and credit ratings. However, considering the characteristics of Korea's economic structure, where real estate assets account for a large proportion of household assets and mortgage loans are rapidly increasing, more detailed analysis was deemed necessary.

A Bank of Korea official said, "Until now, the household debt DB was mainly used to understand how much household debt increased by gender or age group, but with the expanded DB, it has the advantage of being able to know how much loans increased according to individuals' financial and real estate asset status."

*Source: Bank of Korea June Financial Stability Report
High-credit, high-income individuals account for a significant portion of household loans.

This is the first time such an analysis has been conducted. So far, the only data available was from the Statistics Korea's Job Administrative Statistics on wage earners' debt, which reports loan status by housing type of residents. As of last year, apartment residents had the highest average loan amount at 49.97 million won, and the highest delinquency rate was 1.16% among officetel and other residents. However, even in this statistic, the loan proportion according to real estate ownership status is unknown.

With recent sharp increases in real estate prices, the Bank of Korea is intensively examining real estate status not only through the Economic Statistics Department but also related departments. These include the Survey Bureau's Price Research Team (real estate prices), the Financial Stability Bureau (household loan stability), and the Monetary Policy Bureau (liquidity flow). A Bank of Korea official said, "It is not easy for the Bank of Korea, which has the authority to issue currency, to comment on real estate prices, but given the significant impact on the economy, it is a situation that cannot be ignored."

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