Struggling to Repay Debt... 1.75 Million Household Borrowers Repay More Than Their Monthly Salary
Average Total Debt Service Ratio 40%
It has been found that the number of household loan borrowers whose principal and interest repayment amounts exceed their income reaches 1.75 million.
According to the 'Household Loan Status' data submitted by the Bank of Korea on the 2nd to Yang Kyung-sook, a member of the National Assembly's Planning and Finance Committee (Democratic Party), the number of domestic household loan borrowers at the end of the first quarter of this year was 19.77 million. The loan amount totaled 1,845.3 trillion won.
The Debt Service Ratio (DSR) is an indicator that gauges the level of the borrower's total financial debt principal and interest burden compared to their income. It is calculated by dividing the annual principal and interest repayment amount that the borrower must pay by their annual income. The average DSR for all household loan borrowers was estimated at 40.3%. It rose to the 40% range in the fourth quarter of last year (40.6%) and has since remained stagnant. This means that about 40% of the average annual income must be used to repay debts owed to financial institutions.
The proportion of borrowers with a DSR of 100% or more, meaning their annual principal and interest repayment amount equals or exceeds their income, was identified as 8.9% of the total. This amounts to 1.75 million people (8.9% of 19.77 million), whose consumption capacity is effectively estimated to be 'zero.' This proportion has been on a continuous rise since the third quarter of 2020 (7.6%).
Hot Picks Today
"Could I Also Receive 370 Billion Won?"... No Limit on 'Stock Manipulation Whistleblower Rewards' Starting the 26th
- Samsung Electronics Introduces New "Special Performance Bonus" for Semiconductors, Paid Entirely in Company Shares
- "From a 70 Million Won Loss to a 350 Million Won Profit with Samsung and SK hynix"... 'Stock Jackpot' Grandfather Gains Attention
- Trump: "Talks with Iran in Final Stages"... Iran Demands Release of Frozen Assets, End to Maritime Blockade
- "Who Is Visiting Japan These Days?" The Once-Crowded Tourist Spots Empty Out... What's Happening?
Adding borrowers with a DSR of 70% or more but less than 100% (6.3%, or 1.24 million people), the total number of borrowers with a DSR of 70% or higher reaches 2.99 million (15.2%). Generally, a DSR of 70% is considered a situation where almost all income, excluding minimum living expenses, must be devoted to principal and interest repayments. This is analyzed as a result of a significant increase in household loans due to asset investment and financial hardship, coupled with rising interest rates from the second half of 2021 through early this year, which has increased the burden of principal and interest repayments.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
