60% of monthly income is used to repay principal and interest
Average delinquency rate 1.5%… Best in 4 years
The number of multiple borrowers who received loans from three or more financial institutions reached an all-time high of 4.5 million, and the rate of delinquency due to their inability to repay principal and interest also broke the highest in four years.
According to data on the ‘Status of Household Loans for Multiple Borrowers’ submitted by the Bank of Korea to the office of Democratic Party of Korea Rep. Yang Kyung-sook, a member of the National Assembly’s Planning and Finance Committee, on the 12th, the number of domestic household loan borrowers with multiple borrowers was 4.5 million at the end of the third quarter of last year. This is an increase of 20,000 people compared to the second quarter of last year. The proportion of multiple borrowers among all household loan borrowers (19.38 million) was also found to be the highest ever at 22.7%.
The average delinquency rate (based on principal and interest delinquency of more than one month) for multiple borrowers was estimated at 1.5% as of the end of the third quarter of last year. This is the highest level in four years since the third quarter of 2019 (1.5%).
The average total debt service ratio (DSR) of multiple debtors was 58.4%. This means that approximately 60% of monthly income is being used to repay loan principal and interest. DSR is the total principal and interest that a borrower must repay in a year divided by annual income and is an indicator to measure the level of burden on the borrower. The number of multiple debtors with a DSR of over 70% reached 26.2% (1.18 million people). The number of borrowers with a DSR of 100% or more, whose principal and interest owed is more than their income, was 14.2% (640,000).
Another problem is that among multiple borrowers, the number of low-income borrowers (bottom 30% in income) and low-credit borrowers (credit score below 664), who are classified as vulnerable borrowers, is increasing. As of the end of the third quarter of last year, the proportion of vulnerable borrowers among all household borrowers was 6.5%. It is an increase of 0.1 percentage points from the previous quarter (6.4%) and is the highest record in three years since the third quarter of 2020 (6.5%).
Reporter Gyu-sang Yoo
2024-02-12 13:55:05
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