Debt Rises for 9 Consecutive Quarters... Per-Borrower Burden Grows Despite Fewer Borrowers
Wages Have Increased, but Real Income Conditions Are Seen as Worsening
The average debt held by people in their 40s has exceeded 100 million won for the first time on record.
On February 6, Assemblyman Park Sunghoon of the People Power Party, a member of the National Assembly’s Strategy and Finance Committee, cited data submitted by the Bank of Korea and stated that, as of the end of the third quarter of last year, the average outstanding household loan balance per borrower was 97.21 million won. This is the highest figure since statistics began in 2012, and it has been on the rise for nine consecutive quarters since the end of the second quarter of 2023.
By age group, people in their 40s had the highest average at 114.67 million won, followed by: those in their 50s with 93.37 million won; those aged 39 and under with 76.98 million won; and those aged 60 and over with 76.75 million won. The sharp increase in debt appears to have occurred during the life stage when the burden of securing housing, funding children’s education, and preparing for retirement is concentrated.
In contrast, the total number of borrowers decreased. It rose from 19.68 million at the end of the fourth quarter of 2024 to 19.71 million at the end of the first quarter of last year, then remained at a similar level at the end of the second quarter, before falling back to 19.68 million at the end of the third quarter. This is the lowest level in five years. In other words, fewer people are taking on debt, but the size of the debt borne by each individual borrower is increasing, and this structure is becoming entrenched.
The average amount of non-bank loans per borrower was also highest among people in their 40s, at 48.37 million won, followed by: those aged 39 and under with 39.51 million won; those in their 50s with 45.15 million won; and those aged 60 and over with 55.14 million won.
In response to the trend of rising household debt, the Financial Services Commission has set this year’s target growth rate for household loans in the banking sector at 1.8% or less and has announced that it will strengthen oversight across all financial sectors. Financial Services Commission Chairman Lee Eokwon stated, “Household debt is a major potential risk,” and pledged to maintain a stricter management stance.
However, critics point out that, separate from aggregate controls, households’ perceived burden remains high. Analysts say that, over the past five years, tax and social insurance contribution increases outpacing wage growth, combined with continued inflation, have worsened real income conditions. While nominal wages have risen, the increase in take-home pay has been limited, and with the added strain of high interest rates, concerns are growing about a contraction in consumer spending.
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