South Korea's Household Debt Soars to Record USD1.41T
(MENAFN) South Korea’s household debt surged to an all-time high in the second quarter, driven by intensified mortgage activity and increased stock market investment funded by credit, according to data released Tuesday by the Bank of Korea (BOK).
Total household credit—covering loans from banks and other lenders, as well as credit-based purchases—rose by 24.6 trillion won from the previous quarter, reaching 1,952.8 trillion won ($1.41 trillion) at the end of June. The figure marks the highest since data tracking began in 2002 and continues a rising trend now in its fifth consecutive quarter.
The Bank of Korea (BOK) cited increased borrowing for stock market investments and strong demand for mortgage-backed loans—spurred by recent interest rate cuts—as key drivers behind the record-breaking rise in household credit.
In an ongoing effort to stimulate the economy, the central bank lowered its policy interest rate by 25 basis points in both February and May, following similar cuts in October and November of the previous year. The current base rate stands at 2.50 percent.
When excluding credit-based purchases, total household debt still climbed 23.1 trillion won from the first quarter, landing at 1,832.6 trillion won by the end of Q2.
Mortgage lending alone surged by 14.9 trillion won during the April–June period, while other forms of borrowing—such as unsecured credit loans—increased by 8.2 trillion won.
Purchases made on credit rebounded slightly, rising 1.4 trillion won in the second quarter after a 1.6 trillion won decline in the prior three-month period.
(Exchange rate: 1 won = 0.00072 U.S. dollars)
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