Household debt in June the highest in 12 months

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Household debt in June the highest in 12 months


Household debt recorded its largest month-on-month increase of the year in June, adding 3.6 trillion won ($3.4 billion) to reach a 12-month high of 487 trillion won, the Financial Supervisory Service reported yesterday.

Mortgages accounted for 3.1 trillion won of the increase and 336.5 trillion won of the total.

The June data comes after the government announced a package of economic stimulus measures that includes relaxing the loan-to-value and debt-to-income ratios for mortgage loans to boost the real estate market.

In addition, there is speculation the central bank will lower its benchmark interest rate this month to support the government’s stimulus campaign.

While household debt continues to expand, the value of new corporate loans has decelerated.

Overall, corporate loans added 700 billion won from May to total 687.2 trillion won. Since posting 9.4 trillion won worth of fresh loans in April, corporate lending has slowed.

New loans by conglomerates in June dropped by nearly half to 1.4 trillion won after increasing by 2.9 trillion won in May. Small and midsize businesses borrowed 2.1 trillion won in June, compared to 3.6 trillion won in May.

When adding loans to the public sector, the bank loan total stood at 1,204.8 trillion won in June - 5 trillion won more than in May but a sharp drop from the more than 8 trillion won added in May compared to April.

The debt default situation improved in June. For household loans, the overdue payment rate dropped 0.09 percentage point from May to 0.65 percent. When compared to a year ago, the drop was much sharper, shaving off 0.19 percentage point from 0.84 percent.

The mortgage overdue payment rate fell 0.05 percentage point from May to 0.55 percent.

The situation wasn’t bad even in corporate loans, which saw a 0.23 percentage point drop in the overdue payment rate from the previous month to 0.94 percent. But it rose 0.02 percentage point compared to a year ago.

Conglomerates and small and midsize companies saw their overdue payment rate fall from the previous month.

For conglomerates, the rate fell 0.1 percentage point to 0.64 percent, while small and midsize companies saw the rate drop 0.28 percentage point to 1.04 percent. However, both rose when compared to a year ago. For conglomerates, it was up 0.05 percentage point, and 0.01 percentage point for small and midsize companies.


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