Household Debt Increases at Fastest Clip Ever in August

Household debt surged by more than W11 trillion in August alone, a new monthly record, as more and more people borrowed money to make ends meet or to invest in stocks and real estate (US$1=W1,188).

The household loan balance at commercial banks last month stood at W948.2 trillion, up W11.7 trillion from July, according to the Bank of Korea on Wednesday.

Even in March, when the coronavirus epidemic was at its height, household debt surged only by W9.6 trillion.

Household loans are broadly divided into housing and other loans like credit and overdrafts. Housing loans, which account for 73 percent, increased by W6.1 trillion, while other loans grew W5.7 trillion. That means other loans increased far more steeply.

As the government made housing loans more difficult to get, people turned to credit loans or overdrafts to finance apartment purchases or buy stocks amid the recent stock market craze and record-low interest rates.

The BOK added that the termination of coronavirus relief payouts in August prompted more households to take out loans to make ends meet.