Household Debt Rises Again

Household debt rose again in the second quarter this year after falling for two quarters as Koreans snapped up homes before prices go up.

The Bank of Korea on Tuesday that household debt increased by W9.5 trillion in the second quarter to W1,862.8 trillion (US$1=W1,336).

Household debt includes loans from banks and other financial institutions plus outstanding credit card bills. It had been falling at last since the fourth quarter last year to the first quarter of this year, dropping by a record W14.3 trillion amid high interest rates and a sluggish real estate market.

But recent signs of a recovery in the real estate market alarmed many, who borrowed at high interest rates to buy a home now before prices rise into the stratosphere again.

Housing loans constitute the majority of household debt, and they increased by W10.1 trillion to a total of W1,748.9 trillion in the second quarter.

Most of them were mortgages, which increased by W14.1 trillion to W1,031.2 trillion.