Rising Interest Burden Due to High Interest Rates... Monthly Interest Expenses for Regular Workers Up 41% in One Year

Assemblyman Kim Hoe-jae Analyzes Microdata from Statistics Korea Household Trends Survey
Regular Wage Households' Average Monthly Interest Cost Found to Be 360,000 Won

In the second quarter of this year (April to June), households with a wage-employed head spent an average of more than 360,000 KRW per month on interest expenses. This figure represents an increase of over 40% compared to the same period last year, due to the sharp rise in interest rates.

On the 2nd, Kim Hoe-jae, a member of the Democratic Party belonging to the National Assembly's Industry, Trade, Energy, Small and Medium Enterprises Committee, revealed this based on microdata from the Statistics Korea Household Trends Survey, emphasizing the need for "effective measures to support low-income, middle-class, and self-employed individuals."

Households of self-employed with employees (417,000 KRW) and self-employed without employees (314,000 KRW) also saw their household loan interest expenses, including credit and mortgage loans beyond business purposes, increase by 40.0% and 35.4%, respectively.

Interest expenses for temporary worker households (195,000 KRW) and daily worker households (173,000 KRW) increased by 8.1% and 3.9% compared to a year ago, showing relatively smaller growth.

[Photo by Yonhap News]

Kim analyzed, "Wage-employed or high-income self-employed individuals are more likely to take out loans than temporary or daily workers and actually have more debt, so they seem to be more strongly affected by the interest rate hikes."

The Bank of Korea's base rate has gradually risen from 1.25% in January last year to about 3.50% currently. By income quintile, the top 20% income group (quintile 5) spent 520,000 KRW on interest expenses, an increase of 59.2% compared to a year ago, showing the largest growth. This was followed by quintile 3 (270,000 KRW, 31.5%), quintile 4 (326,000 KRW, 26.5%), quintile 2 (191,000 KRW, 17.3%), and quintile 1 (115,000 KRW, -5.2%).

The total interest expense for all households in the second quarter of this year was estimated at 2.8373 trillion KRW per month. This amount was calculated by applying weights to the sample survey values. The total household interest expenses increased by 46.0% compared to the second quarter of last year (1.9433 trillion KRW per month).

The total household loan interest expenses for self-employed households with employees (160.5 billion KRW per month) and those without employees (420.5 billion KRW per month) increased by 50.5% and 49.9%, respectively.

[Photo by Yonhap News]

Accordingly, Representative Kim Hoe-jae emphasized, "Effective measures are needed to support low-income, middle-class, and self-employed individuals."

Meanwhile, when calculating the average including households that did not bear interest expenses, the monthly average interest costs decrease to 181,000 KRW for wage-employed, 61,000 KRW for temporary workers, 57,000 KRW for daily workers, 221,000 KRW for self-employed with employees, and 124,000 KRW for self-employed without employees.

Recently, bank loan interest rates have also continued the high-rate trend, exceeding an annual rate of 7%. With the U.S. signaling additional base rate hikes within the year, concerns are rising that borrowers' interest repayment burdens may increase.

Currently, the average mortgage loan interest rate at commercial banks is in the 4% range. It is also difficult to find interest rates in the 3% range even at internet-only banks.

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