No end seen for skyrocketing household debt

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No end seen for skyrocketing household debt

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Korea’s household debts keep hitting new record highs and there’s no sign of it cooling down.

According to Bank of Korea data on Tuesday, household debt rose by 9.8 trillion won ($8.5 billion) in August, the second-biggest monthly increase since last April’s 10.1 trillion won climb.

The outstanding balance has hit 773.1 trillion won, an all-time-high.

“Despite August being a seasonally slow month, household loans kept rising, led by home mortgage loans,” said a Bank of Korea official.

Since the government unveiled new measures to curb borrowing by financially unfit individuals in July, borrowing by households increased, as more people rushed to secure loans before it becomes too difficult to get one, industry insiders say.

Of the total loan increase, home mortgage loans stood at 6.7 trillion won, the biggest increase since the Bank of Korea started compiling the data in 2003.

Other loans rose by 3.1 trillion won, as more people borrowed to fund their summer vacations.

Banks saw lending to households increase by 7.8 trillion won, including 6.2 trillion won in mortgage loans and 1.6 trillion won in other loans.

Other non-bank depository firms including mutual savings banks and credit unions saw an increase of 2 trillion won, including 500 billion won home mortgage loan and 1.5 trillion won in other loans.

By region, Seoul and nearby areas including Gyeonggi and Incheon saw household loans increase of 5.4 trillion won, with Seoul seeing an increase of 2.7 trillion won, Gyeonggi 2.1 trillion won and Incheon 600 billion won.

The non-metropolitan region saw an increase of 4.4 trillion won, with Busan climbing 600 billion won, Daegu 600 billion won and Daejeon 400 billion won.

BY PARK JUNG-YOUN [park.jungyoun@joongang.co.kr]

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