Korea's household debt-to-GDP rises 2nd-fastest: BIS

South Korea’s household debt-to-gross domestic product increased at the second-fastest rate in the world on-year as of first half of this year, reports said Sunday, quoting data from Bank for International Settlement. 

According to survey of 43 countries conducted by BIS, Korea‘s ratio of total household credit-to-GDP came to 93.8 percent as of the second quarter of 2017, up 4.3 percentage points year-on-year. The data by Basel-based financial institution was released on Dec. 3.

This was the second-sharpest, following that of China, whose household-to-GDP ratio jumped to 46.8 percent in the second quarter, up 5.2 percentage points from a year prior. 

In the first six months, Korea‘s household debt-to-GDP ratio was the 8th-highest, following Switzerland, Australia, Denmark, the Netherlands, Norway, Canada and New Zealand. Only four out of seven countries -- Canada, New Zealand, Norway and Switzerland -- saw the ratio increase over a year.

The debt-to-GDP ratio in Korea also outran the aggregate of the reported economies, at 61.3 percent, based on conversion to US dollars at market exchange rates. The accumulation among the Group of 20 reached 60.2 percent, while those of emerging markets stood at 37.9 percent.

The data set also indicated the total amount of household debt in Korea was $1.38 trillion as of the second quarter. The ninth-largest out of the 43 checked countries following the United Kingdom, China, Japan, the United States, Germany, Canada, Australia and France. Only two out of the eight countries -- Australia and Canada – had a higher household debt-to-GDP ratio than Korea.

In August, the government unveiled sets of measures to calm the housing price and put upper caps on the maximum amount of mortgage loans, in part to curb the build-up of household debt by cooling down the real estate market.

South Korea’s household debt has been growing by 10 percent a year since 2015, when the government started to ease regulations on mortgage loans. The debt has risen by roughly 6 percent for the previous three years.

Meanwhile, Korea showed financial soundness in terms of the total government credit-to-GDP at market value. The figure came to 40.4 percent, sixth-lowest among 28 checked nations by the BIS.

By Son Ji-hyoung 
(consnow@heraldcorp.com)