Interest rate to go up…Household debt to increase KRW 10 trillion on monthly basis
Lee Mi Jong | lmj0919@ | 2017-11-23 10:00:59
Household debt to enter KRW 1400 trillion
Household debt surged in the third quarter, exceeding KRW 1,400 trillion for the first time ever. Especially, even during the implementation of the government`s intense real estate measures, household debt increased by about W10 trillion a month. On November 30, the Monetary Policy Committee is expected to raise the benchmark interest rate. It is pointed out that the issue of household debts will become a major negative factor for the Korean economy, which has been warming up with the export recovery and corporate earnings improvement.
The Bank of Korea, on November, revealed that household credit, including household debt, reached KRW 1,419 trillion in the third quarter. It was the largest increase since the fourth quarter of 2002 when the BOK began to issue relevant statistics.
Household credit is a comprehensive indicator of household debt, which is the sum of loans received from various financial institutions such as banks, insurance companies, savings banks, and lenders, and the amount of credit cards used before payment (sales credit).
The household loan balance of household loans rose by KRW 28.2 trillion (2.1%) from the previous quarter to KRW 1341 trillion. Deposits increased by KRW 15 trillion (2.4 %) to KRW 645.5 trillion and mortgage loans increased by KRW 8 trillion to KRW 457.4 trillion. The increase in mortgage lending is attributed to the increase in demand for individual principal bills and residual loans as the volume of home sales transactions and housing movements increase.
Most of all, other lending, including credit, has risen the most since the 2006 statistics. With the advent of Internet banks such as Cacao Bank and Kaybank, their individual credit lending has increased and consumer sentiment has improved. Compared to the same period last year, the household credit growth rate was 9.5%, which is the first consecutive decline since the second quarter of 2015 (9.2%).
Meanwhile, financial institutions and financial institutions are worried that household debt has not been lifted in the wake of two real estate policies being implemented in June and August.
Especially, as the MPC is expected to raise the benchmark interest rate on November 30, the household debt burden will increase as the interest burden increases. The Bank of Korea (BOK) has signaled that it will inevitably raise the benchmark interest rate ahead of the price hike and the US Federal Reserve`s interest rate hike.
The MPC lowered its interest rate to 2.0 % in October 2014, and has been keeping the low interest rate below 2 % for three years. However, at the MPC meeting in November, it is expected that it will raise the base rate, which is 1.25%, to 1.50% by 0.25%, and will further raise the interest rate next year. Economists have warned that household debt will be a burden on the Korean economy, which has been recovering recently, as the era of ultra-low interest rates is closed and the rate is set to full-blown. "If the interest rate increases, the burden of interest and interest payments will surely increase, and the disposable income will decrease in the consumer sector, which will have a psychological impact." From now on, I will get a lot of it. "
By Lee Mi Jong lmj0919@
[ copyright ⓒ The Digitaltimes ]
Household debt surged in the third quarter, exceeding KRW 1,400 trillion for the first time ever. Especially, even during the implementation of the government`s intense real estate measures, household debt increased by about W10 trillion a month. On November 30, the Monetary Policy Committee is expected to raise the benchmark interest rate. It is pointed out that the issue of household debts will become a major negative factor for the Korean economy, which has been warming up with the export recovery and corporate earnings improvement.
The Bank of Korea, on November, revealed that household credit, including household debt, reached KRW 1,419 trillion in the third quarter. It was the largest increase since the fourth quarter of 2002 when the BOK began to issue relevant statistics.
Household credit is a comprehensive indicator of household debt, which is the sum of loans received from various financial institutions such as banks, insurance companies, savings banks, and lenders, and the amount of credit cards used before payment (sales credit).
The household loan balance of household loans rose by KRW 28.2 trillion (2.1%) from the previous quarter to KRW 1341 trillion. Deposits increased by KRW 15 trillion (2.4 %) to KRW 645.5 trillion and mortgage loans increased by KRW 8 trillion to KRW 457.4 trillion. The increase in mortgage lending is attributed to the increase in demand for individual principal bills and residual loans as the volume of home sales transactions and housing movements increase.
Most of all, other lending, including credit, has risen the most since the 2006 statistics. With the advent of Internet banks such as Cacao Bank and Kaybank, their individual credit lending has increased and consumer sentiment has improved. Compared to the same period last year, the household credit growth rate was 9.5%, which is the first consecutive decline since the second quarter of 2015 (9.2%).
Meanwhile, financial institutions and financial institutions are worried that household debt has not been lifted in the wake of two real estate policies being implemented in June and August.
Especially, as the MPC is expected to raise the benchmark interest rate on November 30, the household debt burden will increase as the interest burden increases. The Bank of Korea (BOK) has signaled that it will inevitably raise the benchmark interest rate ahead of the price hike and the US Federal Reserve`s interest rate hike.
The MPC lowered its interest rate to 2.0 % in October 2014, and has been keeping the low interest rate below 2 % for three years. However, at the MPC meeting in November, it is expected that it will raise the base rate, which is 1.25%, to 1.50% by 0.25%, and will further raise the interest rate next year. Economists have warned that household debt will be a burden on the Korean economy, which has been recovering recently, as the era of ultra-low interest rates is closed and the rate is set to full-blown. "If the interest rate increases, the burden of interest and interest payments will surely increase, and the disposable income will decrease in the consumer sector, which will have a psychological impact." From now on, I will get a lot of it. "
By Lee Mi Jong lmj0919@