Record Numbers of Koreans Owe Money to Multiple Lenders

      October 17, 2023 13:01

      A record 4.5 million Koreans owe money to more than three lenders, which often include subprime lenders or loan sharks.
      According to data from the Bank of Korea, 4.48 million people owe money to multiple lenders as of the end of the second quarter.
      That is nearly one-quarter or 22.6 percent of all 19.78 million people in Korea who are shouldering household debt. The total amount of money they owe stood at W572.4 trillion or W127.9 million per person (US$1=W1,354).
      But their average debt service ratio -- the amount of principal per year they must repay divided by their income -- stands at an alarming 61.5 percent. Financial authorities view a DSR of around 70 percent as cause for vigilance since it means that most of people’s income goes into repaying debts.
      The debt delinquency rate is therefore climbing amid soaring interest rates and reached 1.4 percent as of the end of the second quarter, up another 0.1 percentage points from the first previous three months and the highest since the first quarter of 2020.
      The situation is even worse for multiple borrowers in the bottom 30 percent of the income bracket or with poor credit scores. These vulnerable borrowers accounted for 6.4 percent of total household loan recipients, the highest level in two years and six months.
      Their average DSR stood at 67.1 percent, up 0.2 percentage point on-quarter and the highest level in nine years and six months. 
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