Debt of South Korea’s Households Grew by 8.1% in 2017
South Korea's domestic debt rose to a new record in 2017, even though the government tightened its lending conditions to cool the property market. The Bank of Korea's report showed that household debt, including credit purchases, rose to 1,450.9 trillion won ($1.3 trillion). This indicator grew by 8.1% compared with 2016, and household debt grew by 2.2% in the fourth quarter of last year.
While the growth in mortgage debt slowed in 2017, other loans grew. Banks accounted for about half of the increase in household lending in the fourth quarter, while other financial institutions accounted for more than a third. Purchases on credit, such as credit cards, accounted for 8.9%.
The government is concerned that a high level of debt combined with higher interest rates could lead to a default of vulnerable households. The policy of the administration of the President of South Korea is aimed at slowing the growth of debt and preventing overheating in the real estate market.