Koreans Groan Under Rising Debt Burden

The debt repayment burden of Korean households increased almost 17 percent over the last five years.

According to the Bank for International Settlements on Tuesday, the debt service ratio (DSR) of Korean households reached 12.6 percent in the third quarter of 2021. That means every household must pay 12.6 percent of its income on the principal on debt (US$1=W1,204).

Out of 17 countries whose DSR the bank tracks, Korea ranked fifth after the Netherlands (14 percent), Denmark (13.8 percent), Australia (13.6 percent) and Norway (13.4 percent). But Korea ranked at the top in terms of the growth rate.

Its DSR stood at just 10.8 percent in 2016.

The only countries other than Korea whose DSR rose over the last five years were Sweden (8.9 percent), Finland (7.2 percent), France (4.8 percent) and Japan (1.4 percent).

Korea also ranked high when it comes to household debt ratio to GDP. The country's ratio stood at 106.7 percent as of last September, the fourth highest in the world. The only countries with a higher debt ratio were Switzerland (131 percent), Australia (119.3 percent) and Canada (108.8 percent).

Korea's total household debt stood at a record W1.862 quadrillion as of the end of last year, up 7.76 percent on-year and the second highest rate of growth since 2016, when lending rules were eased.