88 million won of debt per household in the first quarter

Economy

Published: 16 Dec. 2021, 16:40 Updated: 16 Dec. 2021, 19:46

88 million won of debt per household in the first quarter

A loan department at Hana Bank in Seoul. According to a government study, household debt grew at a faster rate than income. [YONHAP]

Korean households had an average of 88 million won ($74,360) of debt at the end of the first quarter, according to a report issued by Statistics Korea, the Bank of Korea and the Financial Supervisory Service on Thursday.

The total is up 6.6 percent on year, the biggest on-year jump since 2018, as individuals and small businesses struggled to make ends meet during the pandemic and as some borrowed aggressively to buy real estate before prices went up further.

Of the debt, loans from financial institutions averaged 65.2 million won, up 7.7 percent on year. Jeonse debt averaged 22.8 million won, up 3.5 percent on year.

People in their 40s had an average of 122 million won in debt, up 7.8 percent year-on-year, and those in their 30s had 112 million won, up 11 percent on-year.

The report said that the high level of debt for those in their 30s was related to real estate financing, as property prices have been rising fast and young people have been rushing to get on the property ladder for fear of missing out.

Borrowing by regular employees, as opposed to those working under contract and the self-employed, increased 10.8 percent to 111 million won on average. The self-employed had an average of 118.6 million won of debt, up 0.6 percent on year.

Mortgages outstanding rose 8 percent, unsecured loans 11 percent and credit card debt 11.2 percent.

Average household income in 2020 increased 3.4 percent to 61 million won.

Income earned through labor rose 1.7 percent to 38.6 million won. Income from business declined 1.4 percent to 11.4 million won.

Government handouts counted as income, including emergency funds distributed during the pandemic, rose 32 percent to 6 million won.

"Overall, the emergency relief grant influence was huge," said Lim Kyung-eun, director of social welfare statistics at the statistics agency. "The public transfer income increase set an all-time record and thus affected all income groups."

Non-consumption spending increased 1.5 percent year-on-year to 1.1 million won. Public pension subscription and social insurance payments increased 7.9 percent to 380,000 won per month. Tax outlays increased 3.1 percent year-on-year to 368,000 won on average.

People have been cutting back sharply on donations, which fell 16.8 percent to 46,000 won per month on average.

Finance Minister Hong Nam-ki said on Thursday the income figures have improved despite Covid-19.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]