A bank loan window in downtown Seoul. yunhap news
Household debt exceeded 1700 trillion won for the first time ever. The balance of household debt has increased by more than 125 trillion won in one year, and the rate of increase has also increased. It is interpreted as the influence of the spread of the craze of’debt investment (investing from debt)’ and’young-eul (loan to the soul)’, which takes loans and invests as the real estate and stock craze blows. A rare phenomenon in which the scale of credit loan growth exceeded mortgage loans continued for two consecutive quarters.
According to the’Household Credit for the 4th Quarter of 2020 (provisional)’ announced by the Bank of Korea on the 23rd, the balance of household credit in the fourth quarter of last year was 173.71 trillion won. It increased by 44.5 trillion won from the previous quarter (1682 trillion won), recording the third quarterly increase. The largest increase in history was in the fourth quarter of 2016 (46 trillion won). The next largest scale was recorded in the third quarter of 2020 (44.8 trillion won).
Household credit is the sum of loans (household loans) from financial companies such as banks, insurance and lenders, and the amount used by credit cards before payment (sales credit). By category, household loans (1630 trillion won) increased by 44.4 trillion won from the previous quarter (155.8 trillion won). Sales credit (95 trillion won) decreased by 200 billion won from the previous quarter due to the decrease in consumption due to the spread of the novel coronavirus infection (Corona 19).
Recently, household debt has risen sharply. The household credit balance increased by 125 trillion won in one year after exceeding the 1600 trillion won level at the end of last year (16 trillion 200 billion won). In terms of annual growth alone, it is the largest since 2016 (139 trillion won). In the fourth quarter of last year, the year-on-year growth rate also recorded 7.86%. Quarterly, from the third quarter of 2019, the growth rate is gradually increasing from 3.88% → 4.14% → 4.64% → 5.17% → 6.97% → 7.86%.
This is the first time since 2017 that the annual increase has reached 100 trillion won. During the Park Geun-hye administration in 2015 (118 trillion won), the first surpassed the 100 trillion won level, followed by an increase of 100 trillion won for three consecutive years until 2016 (139 trillion won) and 2017 (108 trillion won). However, the rise in 2018 (86 trillion won) and 2019 (63 trillion won) briefly slowed as the government’s real estate loan regulations and the standard interest rate hike overlapped.
The main culprit that raised household debt this year is’other loans’, mostly made up of credit loans. Other loans in the fourth quarter of last year recorded 719 trillion won. It was the largest ever, with an increase of 24.30 trillion won from the previous quarter (695 trillion won). In particular, there was a rare phenomenon that the increase in other loans exceeded the increase in mortgage loans for two consecutive quarters following the previous quarter (22.14 trillion won).
This can be interpreted as the impact of a large increase in demand for stock investment and home sales due to the’debt investment’ fever from last year. In particular, it is analyzed that the government’s real estate loan regulation has led to a tendency to draw in credit loans as well as mortgage loans for home sales.
Song Jae-chang, head of the Bank of Korea’s financial statistics team, said, “With the increase in demand for stock trading and housing investment since last year, other loans seem to have increased significantly compared to the previous quarter.” He explained.
Song Jae-chang, head of the Financial Statistics Bureau of the Bank of Korea’s Economic Statistics Bureau, explains the main characteristics of household credit (provisional) during the fourth quarter of 2020 at the Bank of Korea in Jung-gu, Seoul on the morning of the 23rd. Bank of Korea
In particular, it seems that it was before the impact of the loan regulation that the government implemented to manage household debt at the end of last year. On November 13, last year, the Financial Services Commission announced’Household Loan Management Measures such as Credit Loans’ and strengthened regulations on the size and use of credit loans for high-income families with annual incomes exceeding 80 million won.
“It is true that the size of loans has decreased somewhat since the enforcement of the loan regulation in November of last year, but the scale of loans increased before the enforcement of the regulation seems to have had little effect on the overall loan growth.” It remains to be seen whether the regulation can affect the size of household debt.”
Reporter Yoon Sang-eon [email protected]