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Household debt grows faster than income in 2018

All News 12:00 December 17, 2019

By Byun Duk-kun

SEOUL, Dec. 17 (Yonhap) -- Household debt grew at a faster rate than income and assets in 2018, a central bank report showed Tuesday, apparently indicating a deterioration in financial stability.

The average debt of local households came to 79.1 million won (US$67,650) as of end-March, up 3.2 percent from a year earlier, according to the report from the Bank of Korea (BOK).

The average assets of each household, on the other hand, gained only 2.7 percent over the cited period to 431.9 million won.

Also, the average income of local households gained only 2.1 percent on-year to some 58.3 million won.

The increase in disposable income further slowed to 1.2 percent as non-living expenditures jumped 6.2 percent to nearly 11 million won as of end-2018, according to the report.

Household debt grows faster than income in 2018 - 1

Such a sharp rise in non-living expenditures was partly attributed to the increase in household debt, which in turn pushed up households' financial costs to an average 1.94 million won in 2018, up 8.4 percent from 1.79 million won the year before.

The country's household debt has been on a steady increase for years, reaching a record high of 1,572 trillion won as of end-September.

The report, however, noted the number of households with debt dropped slightly to 63.8 percent of the total as of end-March from 64.1 percent a year earlier.

The average financial debt of households came to about 57.6 million won, up 3.9 percent over the cited period.

As of end-March, the average debt-to-asset ratio of local households came to 18.3 percent, up 0.1 percentage point from a year earlier, while the ratio of their financial debt to savings gained 1.0 percentage point to 73.1 percent over the cited period, the report said.


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