– Despite the continued warning of the financial authorities and the Bank of Korea’debt investment (investing in debt)’, the rise in household debt from the beginning of the year is not very serious.
With rising house prices and increasing demand for betting on stocks, the company’s record-breaking increase in January is moving as if the rein is loose.
According to the Financial Services Commission and the Bank of Korea on the 10th, household loans for all financial sectors, including banking sectors, increased by 1,110 trillion won from the previous month.
The recent trend of household loans is characterized by shifting to sectors that are likely to be insolvent in the future, such as non-banking sectors and credit loans, avoiding the regulations of financial authorities.
Experts expressed their concern, “Once exports are good, our economy is holding up, but if the rate of increase in household debt increases faster than this, it will inevitably become a detonator to shake the Korean economy.”
When analyzing household loans by business sector last month, the growth rate was higher in non-bank sectors such as mutual savings banks than in banks. It is interpreted that this is due to the fact that the effect of tightening loans by the financial authorities was concentrated on loans to non-banking sectors that were relatively weak.
A BOK official said, “Last year, as housing transactions increased across the country from October to November, the demand for loans continued at a time lag, and the demand for funds for individual stock investment affected the increase in loans.”
Breaking down the lending increase of 1,100 trillion won in detail last month, banknotes increased by 7.6 trillion won and non-banking sectors increased by 2.5 trillion won. The increase in banking household loans increased by 900 billion won (13.4%) from the previous increase of 6.700 billion won. The increase in non-banking sectors increased by 400 billion won (19%) from the previous 2.1 trillion won.
The higher rate of loan growth in non-banking sectors than in banking sectors means that low-credit people who are blocked from lending in banking sectors have become more dependent on second financial sectors such as savings banks and capital. Considering that the rate of insolvency in the second financial sector is usually higher than that in the banking sector, this is a concern about the expansion of insolvency in the future. When analyzing non-bank loans among household loans, mortgage loans and credit loans led the increase.
The number of non-banking companies increased by 800 billion won in January, a 100% increase from the previous year (400 billion won). Non-bank credit loans increased by 700 billion won in January, up 75% from the previous year (400 billion won).
The surge in household loans last month also played a part in the demand to obtain loans in advance of the financial authorities to strengthen loans next month (a plan to advance household loans).
An official from the banking sector said, “The financial authorities plan to announce a comprehensive plan for household loans focusing on the so-called Total Debt Principal Repayment Ratio (DSR), which uses the repayment capability as a loan standard in March.” Consumers are getting loans such as negative bankbooks in advance,” he said.
The problem is that the Korean economy, which lies on the tectonic plate of corona 19 re-proliferation, is not strong enough to absorb the risk of household debt. As of the third quarter of last year, the ratio of household debt to nominal gross domestic product (GDP) was 101.1%, an increase of 7.4 percentage points from the same period last year. For the first time in history, household debt (1940 trillion won) was larger than the national economy (1918 trillion won).
The BOK believes that if a strong shock occurs in which the bubble suddenly extinguishes while the largely increased debt flows into the asset market, households and businesses will suffer an economic blow of 66.8 trillion won. “As the recovery of the real economy is delayed, it is too early to consider raising the standard rate,” said Kim So-young, a professor of economics at Seoul National University.
[윤원섭 기자 / 김정환 기자]
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