Vulnerable Borrowers' Debt Snowballs

Low-income earners' debts are increasing even as overall household loans are finally on the decline as many people cleared their debts due to high interest rates.

Vulnerable borrowers are low-income earners with bad credit in the bottom 30 percent income bracket who are paying off loans from three or more lenders.

According to the Bank of Korea on Monday, their debts increased by W1.2 trillion over the past year (US$1=W1,308).

Their loans amounted to W94.8 trillion at the end of the first quarter, up W1.2 trillion from a year earlier, or W75.8 million on average per borrower.

At the same time the overall balance of household loans decreased by W24.4 trillion to W1,845.3 trillion over the period, or to W93.3 million a head. However, new loans have been on the rise again for two months running amid a recent recovery in the real estate market.