Young Adults and Elderly Pushed to Secondary Financial Sector... Increase in Credit Loans

[Asia Economy Reporter Bu Aeri] Although the total amount of unsecured loans is on a decline, the total amount of unsecured loans from the secondary financial sector among young people in their 20s and elderly people aged 60 and over is rapidly increasing.

According to the 'Loan Amount Status by Financial Sector' data submitted by the Financial Supervisory Service to Jin Sun-mi, a member of the Democratic Party of Korea, on the 26th, the total amount of unsecured loans as of the end of March this year was 423.2284 trillion won, a 0.8% decrease compared to the end of December (426.4587 trillion won). Of this, 35%, or 151.0056 trillion won, was borrowed from the secondary financial sector.

In particular, the total amount of unsecured loans, which had been continuously increasing over the past three years, decreased this year. However, the total amount of unsecured loans from the secondary financial sector for those in their 20s and those aged 60 and over increased by 0.8% and 0.5%, respectively. It is interpreted that young people and the elderly with low income and credit have turned to unsecured loans from the secondary financial sector amid tightened bank loan regulations and rising loan interest rates, which have raised the threshold for unsecured loans.

As of the end of March this year, the amount of unsecured loans from the secondary financial sector for people in their 20s was 6.8894 trillion won, an increase of 0.8% (57.4 billion won) compared to the end of last year. Bank unsecured loans amounted to 12.4013 trillion won, a 4.6% decrease compared to the end of last year. The total amount of unsecured loans across all financial sectors was 19.2907 trillion won, down 2.7%.

The amount of unsecured loans from the secondary financial sector for those aged 60 and over was 28.3945 trillion won, an increase of 0.5% (153.2 billion won) during the same period. As of the end of March this year, the total amount of unsecured loans for the elderly aged 60 and over was 51.1296 trillion won, a 1% increase compared to the end of last year. Bank unsecured loans amounted to 22.7352 trillion won, up 1.6%.

For the elderly aged 60 and over, the growth rate of unsecured loans from the secondary financial sector was higher than that of banks over the past two years. As of the end of December 2021, the total amount of unsecured loans from banks was 22.3662 trillion won, a 21.7% increase compared to the end of December 2019, while the total amount of unsecured loans from the secondary financial sector was 28.2413 trillion won, a 24.8% increase.

Looking at the total amount of unsecured loans by financial sector, although the total amount of unsecured loans from banks decreased as of the end of March this year compared to the end of last year, the total amount of unsecured loans from savings banks, credit card companies, and insurance companies continued to increase. It appears that loan demand has shifted to the secondary financial sector as bank loan regulations continued.

The total amount of unsecured loans from savings banks increased the most by 2.8% (from 28.6786 trillion won to 29.4841 trillion won). The total amount of unsecured loans from credit card companies increased by 0.7% (from 57.6538 trillion won to 58.039 trillion won), and insurance companies increased by 0.4% (from 7.6268 trillion won to 7.6585 trillion won).

Representative Jin said, "The balloon effect of bank household loan regulations is causing even livelihood loans to be pushed into the secondary financial sector, which is worrisome," and added, "It is necessary to establish long-term and detailed livelihood measures such as expanding the Credit Recovery Committee programs and debt restructuring for young people and the elderly who are in blind spots."

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