[Financial Stability Report] Self-Employed Borrowers Aged 60 and Over Near 1 Million... 15% Are Vulnerable Borrowers

At the End of Q3, 963,000 Borrowers Aged 60 and Over... 31.2% of Total
Increase of 372,000 in Four Years, Leading Overall Growth
"Vulnerable to Real Estate Market Changes... Customized Support for Business Transition Needed"

The number of self-employed individuals aged 60 and over who have taken out loans is approaching one million. Over the past four years, this age group has led the increase in self-employed borrowers, accounting for a larger share than any other age group. Among them, 15% are classified as vulnerable borrowers, having taken out loans from three or more institutions and being either low-income or low-credit. Experts point out that customized support, such as assistance for business transition, is needed, as a shock to the market could lead to a deterioration in the soundness of secondary financial institutions.

Self-Employed Borrowers Aged 60 and Over Increase by 372,000 in Four Years... Loans Rise by 124.3 Trillion Won

A view of the shopping district near Garosugil, Gangnam-gu, Seoul. Photo by Yonhap News Agency

According to the “Recent Status of Loans to the Self-Employed and Age-Specific Characteristics” section of the Financial Stability Report released by the Bank of Korea on December 23, the increase in the number and scale of self-employed borrowers over the past four years has been driven primarily by those aged 60 and over.

As of the end of the third quarter this year (September 30), the number of self-employed borrowers aged 60 and over stood at 963,000, accounting for 31.2% of the total 3,085,000. The shares for other age groups were as follows: those in their 30s and below, 14.4%; those in their 40s, 23.9%; and those in their 50s, 30.5%, with the proportion for the 60 and over group being the highest.

This trend is linked to the sharp increase in self-employed borrowers among the elderly since 2022. At the end of 2021, there were 591,000 self-employed borrowers aged 60 and over, but this number increased by 372,000 over four years. Considering that the total number of self-employed borrowers increased by 464,000 during this period, the majority of the growth came from the elderly. During the same period, the number of borrowers in their 40s and 50s increased only slightly by 5,000 and 110,000, respectively, while the number of borrowers in their 30s and below actually decreased by 23,000.

The increase in loan amounts was also led by this group. From 2022 to the third quarter of 2025, loans to the self-employed increased by 163 trillion won, and 76.3% of this increase (124.3 trillion won) was attributable to borrowers aged 60 and over. By industry, loans for real estate businesses accounted for 38.1%, significantly higher than other age groups. While bank loans made up 59.4% of the total, the share of non-bank deposit-taking institutions such as mutual finance and savings banks was also high at 36%, the largest among all age groups.

“Since 2022, the number of borrowers and loan amounts have increased sharply due to factors such as an aging population, post-retirement entrepreneurship, and demand for working capital,” said Byun Dohun, Deputy Director of the Financial Stability Analysis Team at the Bank of Korea.

Low Delinquency Rate, but Highest Proportion of Vulnerable Borrowers... “If a Shock Occurs, Soundness Crisis Could Spread to Secondary Financial Institutions”

Although self-employed borrowers in the older age group have the lowest loan delinquency rates, they have the highest proportion of vulnerable borrowers.

By age group, the delinquency rate was highest among those in their 40s at 2.02%, while the rate for those aged 60 and over was 1.63%, slightly below the overall average of 1.76%. This is attributed to the higher proportion of real estate business loans, which tend to have relatively low delinquency rates.

However, the proportion of vulnerable borrowers was highest among those aged 60 and over at 15.2%, far exceeding the overall average of 11.9%. Byun pointed out, “The proportion of vulnerable borrowers aged 60 and over continues to rise, so there is a possibility that the delinquency rate for this group could increase rapidly in the future.”

Due to these characteristics, the report noted that if a shock occurs, the soundness crisis could spread not only to banks but also to secondary financial institutions. Byun explained, “Older self-employed borrowers are concentrated in real estate business loans, making them relatively vulnerable to changes in the real estate market. The high proportion of vulnerable borrowers also means that the impact on the soundness of mutual finance, savings banks, and other institutions with high loan exposure could be amplified. Therefore, it is important to implement micro-level policy responses that take into account the age-specific characteristics of self-employed individuals in order to enhance the soundness of the self-employed sector.”

The report emphasized that customized measures, such as support for business transition, are necessary for the elderly. Byun added, “The ongoing discussion on extending the retirement age could delay the transition of older individuals into self-employment and help moderate the increase, but it may also have side effects such as limiting opportunities for younger people to enter the market. Therefore, supplementary measures that expand youth employment opportunities and strengthen debt management for the self-employed should be implemented in parallel.”