Household Debt Hits Record High of 1,862 Trillion Won...Surges by 134 Trillion Won Last Year Alone

South Korea's Household Debt at '1862 Trillion'
Sales Credit Increases by 5.7 Trillion
However, Growth Slows in Q4 Last Year

[Image source=Yonhap News]

Household debt in South Korea increased by more than 134 trillion won in just one year. As a result, household debt reached a record high of approximately 1,862 trillion won.

According to the '2021 Q4 Household Credit (Provisional)' statistics released by the Bank of Korea on the 23rd, the outstanding household credit balance as of the end of December last year was recorded at 1,862.1 trillion won.

This is the largest amount since the statistics began in 2003. Before 2003, household credit amounts were much smaller, making this effectively the highest record ever.

Household credit includes loans received by households from banks, insurance companies, lending institutions, and public financial institutions, plus pre-payment card usage amounts (sales credit) before settlement. While household credit generally increases with economic growth, it has been found to rise more steeply since the spread of COVID-19.

Last year, total household credit increased by 134.1 trillion won. This is the second-largest increase on record, following 139.4 trillion won in 2016.

However, looking at last year by quarter, the increase slowed in Q4. Household credit increased by 19.1 trillion won in Q4, which is only about half compared to 43.5 trillion won in Q2 and 34.9 trillion won in Q3.

The outstanding household loans excluding sales credit such as card payments stood at 1,755.8 trillion won at the end of Q4, marking an all-time high. This is about 13.4 trillion won more than the 1,742.4 trillion won at the end of Q3.

Among household loans, mortgage loans increased by 13.4 trillion won to 982.4 trillion won compared to Q3.

The increase in household loans by institution (compared to Q3) was 8.1 trillion won for deposit banks, 4.7 trillion won for non-bank deposit-taking institutions such as mutual savings banks and credit unions, and 0.5 trillion won for other financial institutions including insurance companies.

As of the end of Q4 last year, the outstanding sales credit balance was 106.3 trillion won. This increased by 5.7 trillion won from the previous quarter, also marking the highest level since the statistics were compiled in 2003. The Bank of Korea explained that this increase was mainly driven by credit-specialized companies as the consumption slump caused by COVID-19 eased.

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