Household Debt at New Record High

      November 26, 2014 13:07

      The amount of household debt has reached yet another record at W1,060 trillion as of the end of September this year (US$1=W1,111).

      Household debt has been scaling new heights quarter after quarter, mainly because of a marked increase in home loans thanks to the easing of regulations on home purchases and low interest rates.

      According to preliminary third-quarter data released by the Bank of Korea on Tuesday, total household debt stood at W1,060.3 trillion as of the third quarter, up W22 trillion from the previous quarter. The debt includes home loans from banks and unsettled credit card spending and cash advances.

      Debt rose W39 trillion in the first nine months of this year alone and the increase is expected to surpass last year's rise of W57.6 trillion before the year is out since credit card spending tends to rise towards the end of the year.

      But the debt increase mainly resulted from loans taken out to buy or rent a home. Such loans rose W11.9 trillion in the third quarter, accounting for 97 percent of all household loans extended by commercial banks over that period.

      On the other hand, the slow economy has trimmed consumer spending, resulting in a W100 billion decline in cash advances and credit-card spending from three months ago to W57.4 trillion.

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