A growing household debt has reduced the financial leeway of South Koreans to one third the amount from three years ago. Korean households who owe more debts than they can pay represented one fourth of the total, up 84.5 percent from three years ago.
A ratio measuring local households’ financial leeway, the amount of money left after subtracting credit purchases and debt-repayment money from annual income, stood at 9.7 percent as of the end of June, down from 29.9 percent at end-June 2009 when Korea was in the midst of the global financial crisis, according to the report by the Korea Credit Bureau (KCB) released Monday.
A decrease in the ratio means Korean households are suffering from mounting debts while their income growth remains unchanged amid the economic slowdown.
The portion of households with more debts than income surged 84.5 percent to 1,983,000 households as of end-June this year from 1,075,000 households three years earlier. That accounted for 24.9 percent out of the total households, up from 15.2 percent, the report showed.
Low-income households, in particular, experienced significantly worsened financial leeway ratio as the portion of households shouldering more debts than income in the first and second quartile represented 31.3 percent and 34.6 percent, respectively.
[Written by Mi-jung Bae / edited by Soyoung Chung]
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