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South Korea's Household Debt Hits Record $1.34 Trillion Amid Mortgage Boom

South Korea's household credit has reached a worrying new record high. The numbers show mortgage lending continues to grow despite government efforts to rein it in. Credit purchases actually accelerated due to summer spending and property tax payments. Officials remain hopeful that recent regulatory measures will help stabilize the situation in coming months.

Key Points: South Korea Household Credit Reaches Record High in Q3

  • Household credit reached 1,968.3 trillion won, highest since data compilation began in 2002
  • Mortgage lending increased 11.6 trillion won despite tighter lending regulations
  • Credit purchases rose 3 trillion won driven by summer holiday spending and property taxes
  • Government implemented stricter measures including lower mortgage caps to cool housing market
2 min read

S. Korea's household credit hits fresh high in Q3 on rising mortgages

South Korea's household credit hits record 1,968.3 trillion won in Q3 as mortgage lending continues to rise despite tighter government regulations.

"The slower growth in household credit was largely attributable to government regulations. - BOK official Kim Min-soo"

Seoul, Nov 18

South Korea's household credit reached a record high in the third quarter, though its growth slowed due to tighter lending regulations, central bank data showed on Tuesday.

Outstanding household credit had stood at 1,968.3 trillion won ($1.34 trillion) as of end-September, up 14.9 trillion won from three months earlier, according to the preliminary data from the Bank of Korea (BOK), reports Yonhap news agency.

The reading marks the highest since the BOK began compiling relevant data in 2002.

It also marks the sixth consecutive quarterly increase, though the growth slowed sharply from a 25.1 trillion-won rise in the second quarter.

Household credit refers to credit purchases and loans given to households by financial institutions.

In detail, household loans stood at 1,845 trillion won at the end of September, up 12 trillion won from three months earlier. Of the total, mortgage lending rose 11.6 trillion won to 1,159.6 trillion won, slowing from a 14.4 trillion-won increase in the previous quarter.

Credit purchases climbed 3 trillion won on-quarter to 123.3 trillion won, accelerating from a 1.5 trillion won rise in the second quarter.

"The increase in credit purchases was driven by heightened summer holiday spending and greater demand for paying property taxes," BOK official Kim Min-soo told a press briefing.

"Overall, the slower growth in household credit was largely attributable to government regulations. The additional measures announced in October to ease conditions in the property market are expected to help stabilize the pace of mortgage lending," he added.

The government has implemented a series of measures to cool the overheated housing market and curb household debt. Under the latest policy package announced on Oct. 15, the government designated 21 additional districts in Seoul as speculative zones, bringing all 25 districts in the capital under stricter regulations.

The measures also tightened lending rules, lowering the cap on mortgage loans to as little as 200 million won, down from the 600 million-won limit set in June.

- IANS

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Reader Comments

R
Rohit P
Interesting to see how other Asian economies are dealing with housing bubbles. The mortgage cap reduction from 600 million to 200 million won is quite drastic! Hope our RBI is watching these international trends closely.
S
Sarah B
As someone who lived in Seoul for 2 years, I can confirm the housing market there is crazy expensive. These measures are necessary but might hurt genuine home buyers. Same story in Mumbai and Delhi!
A
Arjun K
The credit purchase increase due to summer holidays and property taxes is concerning. People are using credit cards for essential expenses - this is exactly what's happening in India too. We need better financial literacy.
V
Vikram M
While I appreciate the government's efforts to control speculation, these sudden policy changes can create uncertainty in the market. A more gradual approach might be better for long-term stability.
M
Michael C
$1.34 trillion in household credit for a country of 51 million people! That's massive per capita debt. Makes me wonder how sustainable this growth model is for Asian economies including India.

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