Choi, a man in his 30s and a salaried worker, has been visiting real estate agencies across Seoul every weekend recently. A tenant living in a leased apartment, he said, “Seeing the price of the apartment I currently live in rise by over 100 million Korean won in just one year, I thought that if I don’t buy a house as soon as possible, I’ll be in big trouble,” adding, “Although it’s not easy to get a housing loan these days, I’m trying to borrow as much as possible to purchase a home.”
Amid South Korea’s household debt swelling to the world’s largest level, borrowers in their 30s were found to have taken out the most loans. According to the Bank of Korea’s “Household Debt by Borrower” released on the 22nd, the average new housing loan amount for those in their 30s in the third quarter—after the government tightened loan regulations to stabilize real estate prices—was 287.92 million Korean won per borrower, an increase of 28.56 million won from the previous quarter. This is the highest amount since the statistics began being compiled in 2013. The average new housing loan amount for those in their 40s was also 246.27 million won, marking a record high. The overall average new housing loan amount was 227.07 million won, the highest since the statistics were first compiled. Min Suk-hong, head of the Bank of Korea’s household debt DB team, explained, “The increase in loan amounts was partly due to loans executed just before the implementation of real estate loan regulations being reflected in the third quarter.”
The Bank of Korea analyzed the loan trends by borrower by examining a 4.8% sample of borrowers registered in the “Nice Personal Credit Information Database.” According to this, the average new loan amount for all categories, including credit loans, for those in their 30s in the third quarter was 53.65 million won per borrower, and 43.37 million won for those in their 40s. Borrowers in their 30s and 40s accounted for 31% and 27%, respectively, of all new loans, meaning the “30s and 40s generation” borrowed nearly 60% of the total.
The outstanding housing loan balance at the end of the third quarter was highest for those in their 30s at an average of 221.37 million won, followed by those in their 20s at 186.63 million won and those in their 40s at 177.63 million won. However, borrowers in their 20s accounted for only 2% of total loans due to the small number of borrowers in that age group. The total outstanding loan balance, including other loans, was slightly higher for those in their 40s. The average outstanding loan balance for those in their 30s was 110.43 million won, and 121.20 million won for those in their 40s. Those in their 20s had 35.46 million won, those in their 50s had 99.98 million won, and those aged 60 and above had 84.31 million won in outstanding loans. The overall average outstanding loan balance was 95.15 million won per borrower.
Amid rising real estate prices centered in Seoul, a “metropolitan area concentration” was also observed in loans. 63% of all loans were concentrated in the metropolitan area, with Seoul accounting for 26% and Gyeonggi-Incheon for 37%. The average new housing loan amount in Seoul in the third quarter was 359.91 million won, much higher than the national average of 227.07 million won. The average new loan amount in Seoul for those in their 30s, who led the increase in loans in the third quarter, was 78.55 million won, significantly higher than the Chungcheong region (45.72 million won), Southeast region (44.73 million won), Daegu-Gyeongbuk region (41.75 million won), Honam region (39.61 million won), and Gangwon-Jeju region (31.45 million won).
The Bank of Korea announced on the same day that it would newly compile and release quarterly statistics on “household debt by borrower,” which had not been disclosed until now. Previously, household debt statistics were only released by lending institution and purpose, with borrower-specific characteristics analyzed only occasionally through irregular reports. Now, they will be regularly published. Min Suk-hong explained, “By providing detailed micro-level information on household debt by individual borrower characteristics and usage patterns, we expect to contribute to analyzing trends and structures of household debt and establishing policies based on micro-level information.”
The government’s strengthened loan regulations to curb the rapid rise in real estate prices have reduced the growth rate of total household loans. According to the Bank of Korea, the total household loan balance at the end of the third quarter was 1,845 trillion won, an increase of 12 trillion won from the end of the previous quarter. This is about half the increase in household loans in the second quarter (23.6 trillion won).
