[Asia Economy Reporter Bu Aeri] Household loans for the elderly aged 60 and above are approaching 350 trillion won, with more than half of these loans coming from secondary financial institutions.
According to data on 'Loan Amounts by Financial Sector' received by Jin Sun-mi, a member of the National Assembly's Political Affairs Committee from the Democratic Party of Korea, from the Financial Supervisory Service, the total household loan amount across all age groups was 1,869.195 trillion won as of the end of March this year. Among these, loans to the elderly (aged 60 and above) accounted for 19% (349.8024 trillion won).
According to Representative Jin, while household loans across all age groups have been increasing over the past two years, the growth rate among the elderly exceeds the average. In particular, concerns have been raised that the rapid expansion of secondary financial institutions is lowering the quality of loans.
As of the end of December last year, the number of elderly household loan holders was 3.956 million, which is a 12.2% increase compared to 3.527 million at the end of December 2019, and the total amount was 345.8148 trillion won, a 15.6% increase from 299.1274 trillion won at the end of December 2019.
The proportion of loans executed through secondary financial institutions among elderly household loans was higher than the average. While loans from secondary financial institutions accounted for 41.2% (771.6025 trillion won) of the total household loans across all age groups, the proportion for the elderly was 54% (191.0914 trillion won).
The growth rate of multiple debtors (borrowers holding loans from three or more financial institutions) was also higher among the elderly.
As of the end of December last year, the number of elderly multiple debtors was 548,000, a 16% increase compared to 473,000 at the end of December 2019. This significantly exceeds the overall age group increase rate of 5.3% during the same period. The total loan amount of elderly multiple debtors also surged by 12.7%, from 64.2557 trillion won to 72.4761 trillion won over two years.
Representative Jin stated, "The increase in secondary financial institution debt due to the combined effects of COVID-19 and banking sector loan regulations is a painful phenomenon," adding, "It is necessary to examine the loan purposes of socially vulnerable groups, including the elderly, and to establish detailed support policies for them."
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