Rising Interest Rates Compound Burden as Household Debt Surpasses 2 Trillion Won

[Anchor]

The recent upward trend in interest rates is raising serious concerns. With household debt having already surpassed 2 trillion won due to mortgage loans and debt-financed investments, further rate hikes are expected to significantly increase the financial burden on the public.

Reporter Min Gyeongho has the details.

[Reporter]

Borrowed out of necessity when business was struggling,

[Hong Yu-jin / Gimpo, Gyeonggi Province: (Have you ever taken out a credit loan?) I took one out when running my business, to pay employee salaries and things like that.]

Taking out loans is also an unavoidable reality for purchasing a home.

[Choi Myeong-ho / Seongbuk-gu, Seoul: It's been about 13 or 14 years, I think? (Have you paid it all off now?) No, I haven't paid it off yet. It was a big help, though. Otherwise, I wouldn't have been able to buy a house.]

As a result, household debt held by the public reached 2,019.8 trillion won, exceeding 2 trillion won for the first time.

In particular, other loans such as credit loans grew by 12.8 trillion won in the second quarter, marking a larger increase than mortgage loans for the first time in three years.

This is analyzed to be driven by a surge in debt-financed investments amid the soaring KOSPI market.

Amid the continuous accumulation of debt, the recent upward trend in interest rates is a major worry.

COFIX, based on newly handled funds used to calculate variable mortgage rates, rose for the fourth consecutive month, recording 3.18%.

Compared to September of last year, this represents a sharp surge of nearly 30%.

If the Bank of Korea raises the base rate once again on the 27th, the upward momentum in interest rates could continue.

Previously, as the government raised lending barriers to manage household debt, many people were driven to secondary financial sectors, and they are expected to face a growing burden from relatively higher interest rates.

In fact, while loans from deposit banks decreased by 200 billion won in the first quarter, loans through savings banks, insurance companies, and card issuers increased by 13.7 trillion won.

While the government recently eased some lending regulations, citing GDP growth driven by the semiconductor boom, experts suggest that a cautious approach is necessary.

[Choi Jae-won / Professor, Department of Economics, Seoul National University: (The increase in GDP concentrated in semiconductors) and how it can flow into other sectors is the problem. When GDP is concentrated in a specific sector, it should not be interpreted in the same way as past GDP increases.]

Experts point out that sound management is needed, taking into careful consideration the purpose of loans and repayment capacities.

(Video reporting: Lee Moo-jin, Video editing: Park Na-young)
※ Please note: This article was translated by AI and may contain errors.