June 30, 2018 08:18
Korea's household debt is expected to surpass a staggering W1,500 trillion soon (US$1=W1,113).
According to the Bank of Korea on Wednesday, total household debt stood at W1,468 trillion in the first quarter of this year, up a whopping eight percent from the same period of 2017 at a time where economic growth is barely three percent.
Since 11 million households were indebted as of March last year, that means each of them owes W133 million.
Although the growth in household debt has slowed recently due to interest rate hikes and the government's efforts to curb housing loans, overall household debt is still expected to surpass W1,500 trillion by the end of this year.
It surpassed W1,000 trillion less than five years ago, though it took almost nine years to rise from W500 trillion to W1,000 trillion, showing how exponential the increase is.
As interest rates rise, a growing number of households are having problems servicing their debts. There were 346,000 "high-risk" households in March last year who spend 40 percent of their income just repaying the principal on their debts and whose debts surpass their assets, accounting for 3.1 percent of total households.
Since then, the number of high-risk households has increased by 34,000. According to the Bank of Korea, their number increases by 116,000 every time interest rates rise two percentage points, resulting in a total of 462,000 high-risk households.
The amount of their debts rises from W57.4 trillion to 90.4 trillion.
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