Continued money focus on real estate and stocks
It takes 18 months to reach 800 trillion → 900 trillion
1,000 trillion again… It only takes 12 months
No problem right now, such as the delinquency rate
Afflicted by falling asset prices and rising interest rates
Experts “We need to prepare from a long-term perspective”
It is analyzed that the low interest rate trend caused by the novel coronavirus infection (Corona 19) has had a big impact on the bank’s household loan balance exceeding 1,000 trillion won for the first time in history. Although the real economy has not improved, it can be seen that the liquidity is abundant and investment funds are concentrated in real estate and stocks. Although the situation is not so unstable that the problem of household debt insolvency will explode right away, if interest rates rise in the future, it is likely to put a considerable burden on households as well as the national economy.
According to the Bank of Korea’s’Financial Market Trends in February 2021′ on the 10th, the balance of household loans to banks as of the end of February was 101.3 trillion won. This is the first time since the statistics of the Bank of Korea have exceeded 1,000 trillion won in household loans.
The number of 1,000 trillion won is itself, but what is more worrisome is the steep debt growth rate. Looking at just one month in February, the increase in household loans was 6.7 trillion won, down from last January (7.6 trillion won). But looking at a longer time series, the trend of debt growth is steep.
The bank’s household loan balance exceeded 600 trillion won in July 2015, and it took 1 year and 4 months to exceed 700 trillion won in November 2016. After that, it took 1 year and 9 months for the balance to reach 800 trillion won and 18 months to reach 900 trillion won. It took only one year for the balance to exceed 1,000 trillion won.
Last year, the enthusiasm for real estate investment was hot. Although the government came up with various real estate measures, the volume of apartment sales increased, and △54,000 households in September last year △72,000 households in October △94,000 households in November △87,000 households in December. The apartment transaction volume has increased, prices have soared, and household loans have also increased. In January of this year, the transaction volume declined to 62,000 households, but so far, the price of leased households has risen and the burden on the households related to housing continues.
From the second half of last year, the phenomenon of’debt investment’, in which debt was invested in stocks, also ignited. As a result, credit loans have risen sharply. Other loans including credit loans during the year last year increased by 32.4 trillion won, more than doubled from the previous year (15 trillion won).
It is fortunate that the loan growth in February decreased from January, but it is too early to judge this as a long-term decline in household loans. It is analyzed that the decline in credit loans in February was influenced by the stock market showing a sideways guarantee and the company’s incentives and payment of rice cakes. Although the heat in the real estate market has cooled down somewhat, it has become more difficult to predict the future situation due to the departure of employees of the Korea Land and Housing Corporation (LH). Even if the home sales market stabilizes, the burden of jeonse prices remains.
Despite the steep rise in household loans, it is unlikely that a major problem will arise immediately thanks to low interest rates and government financial support policies. The delinquency rate for other household loans, including credit loans in February, was 0.37%, up 0.04 percentage points from the end of the previous month. However, it is 0.1 percentage points lower than a year ago, and the mortgage loan delinquency rate (0.14%) remained at the level at the end of the previous month.
An official from the Financial Supervisory Service said, “The delinquency rate usually falls a little at the end of the quarter when the amortization and sale of delinquent bonds is concentrated, and then tends to rise in the next month, the beginning of the quarter.”
However, experts say that countermeasures need to be prepared from a long-term perspective.
So-young Kim, a professor of economics at Seoul National University, said, “I don’t think that exceeding 1,000 trillion won in household loans will be a big problem right away, but it is worrisome that it is continuing to increase.”
Professor Kim advised, “I believe that debt will increase in the future as the government is providing liquidity at low interest rates.” He advised, “It is important to set the timing of raising interest rates so that it is neither too slow nor too fast.”
Seong Tae-yoon, professor of economics at Yonsei University, said, “The increase in household loans is a concern even though the government is blocking the total amount of loans. “There may be a situation that is unfortunate,” he warned. Professor Seong was concerned that falling asset prices and increasing household burdens could cause problems for the national economy.
Reporters Um Hyung-jun, Nam Jung-hoon, and Kim Hee-won [email protected]
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