[2020 National Audit] Mortgage Loan Delinquencies Snowball... 1st and 2nd Tier Financial Sectors Accumulate 2.33 Trillion Won

Apgujeong Hyundai Apartment. Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Kim Min-young] Mortgage loan delinquencies have ballooned to approximately 2.33 trillion KRW. This appears to be a phenomenon resulting from soaring housing prices contrasted with stagnant household incomes.

According to data submitted by the Financial Supervisory Service to Yoon Doo-hyun, a member of the National Assembly's Political Affairs Committee from the People Power Party, as of the end of June, the outstanding balance of bank mortgage loans was 341.94 trillion KRW, an increase of 5.3% (17.32 trillion KRW) compared to 324.62 trillion KRW at the end of 2016. During the same period, the delinquent balance (overdue by 30 days or more) surged 47% (2.4 billion KRW) from 510 billion KRW to 750 billion KRW. The delinquency rate (delinquent balance divided by loan balance) also rose from 0.16% to 0.22%.

The situation in the secondary financial sector (insurance, savings banks, mutual finance, and specialized credit finance companies) was worse. The total outstanding mortgage loan balance slightly increased by 0.8%, from 110.1178 trillion KRW at the end of 2016 to 110.202 trillion KRW at the end of June this year. However, during the same period, the delinquent balance grew by 45% (493.7 billion KRW), from 1.0891 trillion KRW to 1.5828 trillion KRW. The delinquency rate rose from 0.99% to 1.44%.

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