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South Korea’s household debt keeps record-breaking trend in 2021

SEOUL (XINHUA) – South Korea’s household debt kept a record-breaking trend last year due to the still low policy rate, central bank data showed yesterday.

Household credit, which refers to debts owed by households to banks, insurers and other lenders as well as purchase on credit, amounted to KRW1,862.1 trillion (USD1.56 trillion) at the end of December in 2021, according to the Bank of Korea (BOK). It has been the largest since data began to be compiled in 2003.

The amount rose KRW134.1 trillion (USD112.4 billion) from a year ago, marking the second-highest yearly increase amid the near-record-low policy rate.

The central bank raised its benchmark interest rate from a record low of 0.50 per cent to 0.75 per cent in August last year, before lifting it further to one percent in November.

During the fourth quarter, the household credit rose KRW19.1 trillion (USD16 billio), slower than the growth of KRW34.9 trillion (USD29.2 billion) for the third quarter and KRW43.5 trillion (USD36.4 billion) for the second quarter, respectively.

Mortgage loan to households advanced KRW71.8 trillion (USD60.2 billion) from a year earlier to KRW982.4 trillion (USD823.1 billion) at the end of December.

Other loans, including credit loan, expanded KRW52 trillion (USD43.6 billion) to KRW773.4 trillion (USD648 billion), while purchase on credit grew KRW10.3 trillion (USD8.6 billion) to KRW106.3 trillion (USD89 billion) in the cited period.