Last year, household debt in South Korea increased by more than 40 trillion won, marking the largest increase since 2021. Based on the balance, it exceeded 1900 trillion won, doubling since it surpassed 1000 trillion won in 2013 after 11 years. The increase in household loans, which exceeded 1800 trillion won, led the overall increase in debt.
According to the Bank of Korea's '2024 4th quarter household credit (provisional)' announced on the 18th, the balance of household credit (household debt) at the end of last year was recorded at 1927 trillion 3000 won. This is an increase of 2.2% (41 trillion 8000 won) compared to a year ago, expanding about twice the increase in 2023 (17 trillion 9000 won). This is the largest increase since it rose by 7.7% (133 trillion 4000 won) in July 2021.
Household credit refers to the comprehensive debt of households in South Korea, including loans (household loans) received from banks, insurance companies, and other financial institutions, as well as credit card usage (sales credit). The Bank of Korea has been providing relevant statistics since the 4th quarter of 2002.
Household credit, which was 464 trillion 7000 won in 2002, has set record highs every year since then. It first surpassed 1000 trillion won in 2013 with a record of 1019 trillion 400 million won, and now, after 11 years, it has surpassed 1900 trillion won. Considering that it took a total of 11 years to increase from about 500 trillion won to over 1000 trillion won, the growth trend appears to be accelerating.
On a quarterly basis, the 4th quarter of last year saw an increase of 0.7% (13 trillion won) compared to the previous quarter. Household loans increased by 13 trillion 3000 won in the 2nd quarter of last year, marking a return to growth after three consecutive quarters of increase. However, the increase was smaller than in the previous quarter (+18 trillion 5000 won).
The household loans, which account for the largest portion of household credit, increased significantly, leading the overall growth trend. Household loans were recorded at 1807 trillion won, an increase of 10 trillion 6000 won compared to the end of the previous quarter. Although it has shown three consecutive quarters of growth, the increase was smaller than in the previous quarter (+16 trillion 7000 won). Compared to the end of last year, it has increased by 39 trillion 7000 won.
By product type, housing mortgage loans (housing loans) increased by 19 trillion 4000 won in the 3rd quarter of last year, leading to a reduced increase of 11 trillion 7000 won in the 4th quarter. The Bank of Korea explained that the increase in housing loans shrank as housing transactions declined. According to the Ministry of Land, Infrastructure and Transport, the nationwide apartment transaction volume fell from 142,000 units in the 3rd quarter to 114,000 units in the 4th quarter.
Other loans decreased from 2 trillion 7000 won in the 3rd quarter to 1 trillion 2000 won in the 4th quarter. The decline was influenced by the decrease in the credit provision amounts from securities firms, which went from -3 trillion 2000 won in the 3rd quarter to -1 trillion 8000 won in the 4th quarter. During the same period, the KOSPI dropped from -0.7% to -6.6%.
Kim Min-su, Head of Team at the Bank of Korea's Financial Statistics Department, noted, "The increase in household loans in the 4th quarter has shrunk compared to the 3rd quarter due to a declining housing transaction volume since July reaching its peak, along with the effects of the implementation of the stress debt service ratio from September and the bank's loan portfolio management strategies."
The Bank of Korea projected that the household debt ratio will stabilize downward for the time being. Team Head Kim said, "Last year, household credit increased by 2% year-on-year, but nominal GDP grew by over 6% from the 1st quarter to the 3rd quarter, so the household debt ratio will stabilize downward for three consecutive years," adding, "This year, due to the continued policy on household debt management by financial authorities, including the implementation of the stress debt service ratio stage 3, the trend of household debt stabilization will continue for the time being."
Meanwhile, household sales credit in the 4th quarter of last year recorded 120 trillion 3000 won, an increase of 2 trillion 4000 won compared to the previous quarter. The increase was larger than the previous quarter (+1 trillion 8000 won). The rise in end-of-year consumption influenced the personal credit card usage, which increased from 192 trillion 9000 won to 196 trillion 3000 won.