Loan Defaults or Quick Sales... Tears of the 2030 Yeongkkeul Generation

Delinquency Rate on Mortgage Loans Under Age 20 Dominates Other Age Groups
Delinquent Amount 140 Billion Won... Unable to Repay Principal and Interest Due to High Interest Rates

The delinquency rate for mortgage loans among those aged 20 and under has dominated other age groups for the second consecutive year. Analysts suggest that the younger generation, who went all-in ('yeongkkeul') to buy their own homes, is now facing a crisis of being unable to repay loan principal and interest due to high interest rates.

Mortgage Loan Delinquency Rate for Those 20 and Under at 0.39%... Twice That of Those in Their 30s

On the 21st, a notice about mortgage loan interest rates was posted at a commercial bank in Seoul. Photo by Kang Jin-hyung aymsdream@

According to data submitted by 19 banks (commercial, regional, and internet banks) to the Financial Supervisory Service on the 11th, obtained by Yang Kyung-sook, a member of the National Assembly's Planning and Finance Committee from the Democratic Party, as of the end of the third quarter this year, the mortgage loan delinquency rate for the age group 20 and under was 0.39%. This is a decrease of 0.05 percentage points from the end of the second quarter (0.44%), but an increase of 0.15 percentage points compared to the same period last year (0.24%).

This represents the steepest rise among all age groups. Compared to the same period last year, the delinquency rates at the end of the third quarter this year increased as follows: 30s from 0.09% to 0.20%, 40s from 0.12% to 0.23%, 50s from 0.13% to 0.25%, and 60 and above from 0.13% to 0.23%.

The delinquency rate for those 20 and under surpassed those in their 30s (0.08%), 40s (0.10%), 50s (0.12%), and 60 and above (0.13%) at the end of the third quarter in 2021, standing at 0.14%, and has dominated other age groups for eight consecutive quarters.

The overall mortgage loan delinquency rate at the end of the third quarter this year was 0.24%, doubling compared to the same period last year. During the same period, the total delinquent amount also more than doubled from 760 billion KRW to 1.56 trillion KRW.

The delinquent amount for those 20 and under was 140 billion KRW at the end of the third quarter, slightly down from the record high of 150 billion KRW at the end of the second quarter, but more than 50% higher than the 90 billion KRW recorded in the same period last year.

During the same period, the delinquent amounts for those in their 30s increased from 150 billion KRW to 340 billion KRW, 40s from 220 billion KRW to 470 billion KRW, 50s from 180 billion KRW to 370 billion KRW, and 60 and above from 130 billion KRW to 240 billion KRW.

Deterioration of Financial Soundness Among Youth... Rapid Disposal of Homes

View of Yeouido apartments from the 63 Building observatory. Photo by Hyunmin Kim kimhyun81@

The financial soundness of young people who took so-called 'yeongkkeul' loans during the real estate price surge is deteriorating. The debt-to-asset ratio for households aged 30 and under rose by 1.5 percentage points to 29.6% compared to 28.1% in the same period last year. This figure far exceeds the average for all age groups, which stands at 17.4%.

As the burden of high-interest repayments grows, there is also a trend of quickly disposing of homes and moving to monthly or yearly rental housing. According to Statistics Korea, the homeownership rate for those aged 39 and under dropped by 2.4 percentage points from 34.1% last year to 31.7% this year.

However, recently, as the younger generation has been mentioned as a target for win-win finance, mortgage loan interest rates at commercial banks have also shown a downward trend. As of the 8th, the fixed mortgage loan interest rates at Korea's five major banks?KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup?ranged from 3.76% to 6.02% per annum, down from 3.82% to 6.12% on the 1st. During the same period, variable rates also slightly decreased to 4.51% to 7.02% per annum.