Variable Interest Rate Jeonse Loans Account for 93.5%... 60% of Borrowers Are Youths in Their 20s and 30s

"Measures Needed for Refinancing Jeonse Deposit Loans and Other Options"

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[Asia Economy Reporter Yoon Seul-gi] It has been revealed that most jeonse loan products have variable interest rates. There are concerns that the repayment burden on young people in their 20s and 30s, who have a large proportion of jeonse loans amid rising interest rates, could increase.

According to the status of jeonse loan funds submitted by Jin Sun-mi, a member of the Democratic Party of Korea, from the Financial Supervisory Service on the 11th, the outstanding balance of variable interest rate jeonse loans in the banking sector was 151.5 trillion won as of the end of last year, accounting for 93.5% of the total 162 trillion won.

The proportion of variable interest rate loans has been on the rise over the past three years, increasing from 83.2% at the end of 2019 to 86.7% at the end of 2020. The recent surge in general jeonse loan balances and the limited supply of fixed interest rate loans through some policy financial products aimed at supporting low-income households are cited as causes.

Looking at the borrower composition of jeonse loans by age, more than half were young people in their 20s and 30s. As of the end of June, the number of borrowers in their 20s was 306,013 (22.2%), and those in their 30s numbered 542,014 (39.4%), making the total for the 20s and 30s age group 61.6%.

In terms of loan amounts, borrowers in their 20s accounted for 23.8633 trillion won (14.1%), and those in their 30s accounted for 70.1325 trillion won (41.5%), with the total jeonse loan balance for the 20s and 30s age group (93.9958 trillion won; 55.6%) approaching 100 trillion won.

Representative Jin said, "Jeonse loans are for living expenses related to housing," and added, "Due to the steep rise in interest rates, various measures such as refinancing jeonse loans should be devised to prevent young people from taking on excessive debt burdens and becoming insolvent."

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