Household Debt Reaches Yet Another Alarming Milestone

Household debt has reached yet another alarming milestone by surpassing W1.8 quadrillion in the second quarter of this year (US$1=W1,167). It increased even faster than in the first quarter.

The main reason is unremitting demand for housing loans as housing prices spiral out of control due to the government's failed real estate policy.

The Bank of Korea on Tuesday said households' credit balance stood at W1.81 quadrillion at the end of the second quarter, up W41.2 trillion from the previous quarter. That was up W168.6 trillion or 10.3 percent on-year, the fastest increase since the second quarter of 2017.

Financial authorities told banks in April to keep the increase in household loans at five to six percent a year, but it seems that has not been effective in curbing them so far.

Critics say the government is making the situation worse with a shock therapy that has caused several banks to suspend home loans altogether, prompting borrowers to scramble for credit anywhere they still can.