Mon, 01 Mar 2021

S. Korea's household debts hit record high in 2020

Xinhua
23 Feb 2021, 16:30 GMT+10

SEOUL, Feb. 23 (Xinhua) -- South Korea's household debts hit a new record high last year as households rushed to purchase home and stocks with borrowed money amid the record-low policy rate, central bank data showed Tuesday.

Household credit reached a new high of 1,726.1 trillion won (1.6 trillion U.S. dollars) as of the end of December, up 125.8 trillion won (113.4 billion U.S. dollars) from a year earlier, according to the Bank of Korea (BOK). It marked the biggest yearly increase in four years since 2016.

During the October-December quarter, the household credit picked up 44.2 trillion won (39.8 billion U.S. dollars). It was the third-biggest quarterly expansion since data began to be compiled in 2003.

The household credit refers to debts owed by households to financial institutions, such as banks, insurers and other lenders, together with purchase on credit.

The rapid growth in household credit was attributed to households rushing to borrow money for stock investment and home purchase amid the ample liquidity.

The BOK has left its benchmark interest rate unchanged at an all-time low of 0.50 percent since May last year.

Household debts, which exclude the purchase on credit, hit a new high of 1,630.2 trillion won (1.5 trillion U.S. dollars) as of the end of December, up 44.5 trillion won (40.1 billion U.S. dollars) from three months earlier.

During the fourth quarter, mortgage and credit loans expanded 20.2 trillion won (18.2 billion U.S. dollars) and 24.3 trillion won (21.9 billion U.S. dollars) respectively.

The purchase on credit dipped 0.2 trillion won (180 million U.S. dollars) to 95.9 trillion won (86.4 billion U.S. dollars) in the fourth quarter.

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