South Korean household debt rose in 2015 from a year earlier as people with high incomes moved to buy homes, government data showed Monday.
According to Statistics Korea, the average household was 61.81 million won ($52,500) in debt as of late March of this year, up 2.2 percent compared to the year before.
Of the total, 69.9 percent, or 43.21 million won, was financial loans, up 4.9 percent on-year, with the rest in security deposits that must be paid back down the line.
Data showed that 64.3 percent of all South Korean households had debt, down 1.6 percentage points from the previous year. Of the total debt, 57.3 percent were mortgage loans with the remainder being loans taken out on personal credit.
“The increase is the result of people with relatively high incomes, who did not own a home in the past, opting to purchase a house that led to more borrowing,” said Kim Bo-kyung, head of the agency’s statistics division.
She pointed out that while debt did rise, so did income during the same period.
“The size of debt is usually equal to the size of assets held,” the official said.
The latest numbers showed debt rising across most age groups with the exception of those in their 50s. Debt for people in their 50s inched down 1.4 percent, although the same people held the largest amount of debt.
Salaried workers and self-employed businesses saw debt rise 1.5 percent and 3.8 percent vis-a-vis the year before.
Total debt held by households were equal to 18 percent of assets this year, unchanged from late March 2014, with financial debt equal to 64.1 percent of all savings, a rise of 2.4 percentage point on-year.
The data also showed that an average South Korean household held 342.46 million won worth of assets. It earned 47.67 million won per year with disposable income hitting 39.24 million won.
Earnings rose 2.3 percent on-year, with 65.6 percent being earned income.
It said 68 percent of all households had assets under 300 million won, with 4.2 percent having more than 1 billion won.
Broken down, 26.5 percent of assets were in financial holdings, with real assets, including properties, making up 73.5 percent.
The finance ministry said that while overall debt did increase, there were improvements in the nature of debt.
“More debts were those that required the borrower to pay back both the principal and interest in installments that can prevent debt from getting out of control,” it said.
It added that with more of the debt being incurred by high wage earners who used the money to buy property, the likelihood of insolvency remained low.
The ministry said that it plans to keep tabs on debt gains and aggressively deal with sudden hikes that can pose problems for the economy as a whole. (Yonhap)