[2021 National Audit] "Youth Jeonse Loans 88 Trillion Won... Increased by 60 Trillion in 5 Years"

[Asia Economy Reporter Kiho Sung] It has been revealed that jeonse loan debt among young people in their 20s and 30s has increased by about 60 trillion won over the past five years. The rising trend of household loans among the youth shows no signs of slowing down, highlighting the urgent need for countermeasures.

According to data received on the 21st from the Financial Supervisory Service by Jeong Uncheon, a member of the National Assembly's Planning and Finance Committee from the People Power Party, the outstanding balance of jeonse loans at the five major commercial banks (KB Kookmin, Shinhan, Hana, Woori, NH Nonghyup) stood at 148.5732 trillion won as of the end of June 2021, an increase of 95.7543 trillion won (181.2%) compared to the end of June 2017, when the Moon Jae-in administration began, and rose by 26 trillion won in just one year.

In particular, amid the real estate frenzy and the jeonse shortage, the outstanding balance of jeonse loans among the youth, which was 29.1738 trillion won in 2017, surged to 88.0234 trillion won in five years under the Moon Jae-in administration, accounting for 60% of the total jeonse loan balance. The outstanding balance of jeonse loans for those in their 20s was only 4.3891 trillion won in 2017 but skyrocketed more than fivefold to 24.3886 trillion won by June this year.

Furthermore, household loans among the youth are also increasing sharply. The proportion of household debt held by young people expanded significantly after COVID-19, reaching 26.9% in the second quarter of 2021, and the household debt growth rate was 12.8% year-on-year, far exceeding the 7.8% increase seen in other age groups.

Since young people still have relatively low income and assets, their financial soundness is vulnerable compared to other age groups, making it difficult to bear excessive debt.

The proportion of vulnerable young borrowers who are multiple debtors (borrowing from three or more financial institutions) and belong to the bottom 30% income bracket or have a credit score of 664 or below is 6.8%, higher than that of other age groups (6.1%).

Additionally, the proportion of low-income young borrowers in the bottom 30% income bracket was 24.1% as of the second quarter of 2021, nearly twice as high as the 14.4% seen in other age groups.

Assemblyman Jeong emphasized, “For young people, the proportion of vulnerable borrowers is higher than in other age groups, and as debt burdens increase due to interest rate hikes, there is concern that healthy consumption activities may be restricted,” adding, “It is urgent to closely monitor trends for the smooth landing of household debt among the youth and to prepare proactive management measures in response to the rising household debt.”