Lee Ju-yeol: "The Sharp Increase in Household Debt Is Largely Due to Rising House Prices"

October 15 National Assembly Planning and Finance Committee 'Bank of Korea' Audit
Governor Lee Explains "Policy Will Alone Is Not Enough"

Bank of Korea Governor Lee Ju-yeol is attending the National Assembly's Public Administration and Finance Committee's audit of the Bank of Korea held on the 15th, providing a business report. Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Jang Sehee] Lee Ju-yeol, Governor of the Bank of Korea, stated that household debt has surged due to rising housing prices.

Governor Lee appeared at the National Assembly's Planning and Finance Committee's Bank of Korea audit on the 15th and, regarding the causes of the increase in household debt, responded, "There are several reasons for the rapid increase in household debt, but I believe the rise in prices is also a significant factor."

When Rep. Chu Kyung-ho of the People Power Party asked, "The cause of household debt is the skyrocketing real estate prices, but didn't you blame the public by mentioning risk preference and profit-seeking through borrowing?" he acknowledged, "Assuming the transaction volume and LTV (Loan-to-Value ratio) remain the same, the scale of household debt has increased due to the rise in real estate prices."

Governor Lee also said, "I fully agree with the opinion that the housing market must stabilize to control household debt."

Earlier, Rep. Chu pointed out that last July, Governor Lee said, "Looking at the government's (real estate) measures, it showed a strong will to stabilize the housing market. I especially think it will definitely be effective in suppressing speculative demand from multi-homeowners. Therefore, I believe the possibility of further housing price increases will be quite limited," highlighting the discrepancy in Governor Lee's forecast.

Governor Lee explained, "Rather than making a forecast, the core of my statement at the time was, 'Since the government's policy will is so strong, why wouldn't it affect real estate prices?' It was true that I expected an impact because the government's real estate policies were very strong, but seeing that the Blue House even apologized, I came to think, 'Policy will alone is not enough.'"

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