One out of five South Korean households borrowed money from multiple lenders, boosting worries about record-breaking household debts, central bank data showed on Tuesday. According to a report submitted by Bank of Korea (BOK) to Rep.
Kim Hyun-mi of the main opposition Minjoo Party, households borrowing money from more than three financial institutions reached 20.1 percent of the total as of end-June. The percentage of so-called multiple borrowers topped 20 percent for the first time since the BOK began compiling the data in 2010.
The portion increased from 18.8 percent in 2010 to 19.4 percent in 2011 before falling to 19.0 percent in 2012 and 18.7 percent in 2013. It rebounded to 19.0 percent in 2014, reaching 19.8 percent at the end of last year.
The rising multiple borrowers raised concerns about the debt-servicing capability among households as multiple borrowing may indicate a balloon effect, which means that households seek lenders demanding higher lending rate instead of commercial banks.
Average loan per multiple borrowers increased to 109.1 million won (98,800 U.S. dollars) as of end-June, up from 92.6 million won at the end of 2012. It almost doubled 62.8 million won owed by non-multiple borrowers to financial institutions as of end-June.
Latest comments