Korea's household debt at fresh peak in Q3 on housing demand

[Graphics by Song Ji-yoon]

Household debt in South Korea hit a fresh record high as of September despite loan regulations and higher lending rates on surging housing and rent prices.

According to the data released by the Bank of Korea on Tuesday, the outstanding balance of household credit loans stood at 1,844.9 trillion won ($1.55 billion), the highest since the data began to be compiled in 2003.

Household loans from July to September increased 2 percent or 36.7 trillion won from the end of June. The growth slowed down from the quarterly gain in the previous three months, but was similar to the gain in the first quarter.

Against a year ago, household credit grew by 9.7 percent or 163.1 trillion won.

Mortgage-backed loans gained 20.8 trillion won to 969 trillion won as of the end of September, growing faster than the previous three months.

Other loans including personal credit loans rose at a slower pace than the previous quarter, adding 16.2 trillion won to 775.7 trillion won.

Loans extended by banks increased 21.1 trillion won, gaining faster than the 12.4 trillion won on-quarter growth in the second quarter. Loans by non-banks added 8.2 trillion won and other financial institutions including insurers 7.7 trillion won.

“The growth in household lending by banks was driven by the increase in mortgage-backed loans amid brisk housing transactions,” according to Song Jae-chang, head of the financial statistics team at the central bank.

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