World Economy

S. Korea Household Debt Dips

S. Korea Household Debt DipsS. Korea Household Debt Dips

The ratio of South Korea’s household debt borrowed by local banks dipped to the lowest-ever level as stricter screening regulations prompted more people to take out loans from nonbanking lenders, data showed Saturday, Yonhap reported. The private sector debt, excluding credit card spending, tallied at 569.3 trillion won ($482.5 billion) at end-March, and loans by local banks accounted for 49.1% of the total, the Bank of Korea said. It is the lowest since the fourth quarter of 2002 when the central bank first released the household debt data. The ratio has steadily risen from 53.3% in late 2002 to 60.1% in late 2006. It fell to 49.9% in the first quarter of 2014, sinking below the threshold 50% for the first time. The ratio of bank loans shrank as more people took out debts from nonbanking lenders, including insurance companies, financial companies, credit unions and loan sharks. The government toughened mortgage loan screening in February on rising concerns over the fast-rising household debt, prompting low-income families and those with bad credit to make a detour to nonbanking lenders.