One in three Koreans in debt as they borrowed by to buy houses: report

Published : Oct 9, 2017 - 11:13 Updated : Oct 9, 2017 - 17:47

One in three South Koreans have borrowed money to buy houses, and they took a greater amount of loans than other debtors, becoming one of the main reasons behind the ballooning household debt in Asia's fourth-largest economy, a report showed Monday.

A total of 18.57 million South Koreans, 36 percent of the total population, borrowed 1,439 trillion won ($1.2 trillion) from local lenders as of June, with each holding 77.47 million won of debt on average, according to the office of Rep. Chung Sye-kyun's, which analyzed credit data from NICE Holdings.

A third of the debtors, or 6.22 million people, took out a combined 938 trillion won of loans in the form of a mortgages, Chung's office said.

Customers ask about their debt plans at a Seoul bank on Aug. 21, 2017. (Yonhap)

Each mortgage borrower had 150.74 million won in debt on average, which is about four times the total for of non-mortgage borrowers.

The debt burden was much higher for multiple homeowners although their income level was not much greater than those with just one house, posing a higher risk in terms of their debt service capability, it noted.

The average debt of 1.32 million people with multiple houses was estimated at 220.94 million won, far surpassing the average debt of 131.82 million won by owners of a single home.

Chung called for the government to take into consideration debt by multiple home owners when taking tougher real estate measures to help mitigate the rising financial risk to Asia's fourth-largest economy.

"The government needs to strengthen loan regulations on multiple home owners, while also taking cautious measures so as not to make them default or experience difficulties paying back debt due to lack of liquidity," the National Assembly Speaker said.

The government is set to announce a fresh set of household debt measures this month, which would tighten loan regulations on those with several houses to curb highly leveraged investment in the real estate market.

"Considering the macroeconomic situation and policy impact, the government plans to announce household debt measures as early as mid-October," a senior government official said. "Multiple homeowners who take additional loans would come under tighter monitoring." (Yonhap)