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Households' interest burden reaches all-time high: data
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The proportion of households' interest payments to their monthly income hit a
record high in the second quarter, data showed Wednesday, indicating that the
financial burden from mounting debts is weighing heavily on many
people.
According to the data by Statistics Korea, a household with two or more family members paid a monthly average of 74,083 won (US$68.9) in interest on debts in the April-June period, up 13.7 percent from a year earlier.
The amount accounted for 2.32 percent of the households' average monthly income. The debt-income ratio marked the highest ever since data started to be compiled in 2003.
The debt used in the data included loans for home purchases and other household expenses. If borrowing for business purposes was included, the ratio could have been higher, experts said.
The figures come as ballooning household debt has emerged as a major drag on the economy. As of the end of June, outstanding household credit stood at 876.3 trillion won, up 18.9 trillion won from three months earlier, according to the Bank of Korea (BOK).
The central bank's push to tighten its monetary policies also contributed to the higher financial burden from interest payments. The BOK has raised borrowing costs by a total of 1.25 percentage points since July last year.
Low-income earners were among the hardest-hit by the mounting interest burdens, the data showed.
Those in the lowest 20 percent income bracket paid an average of 31,880 won every month during the second quarter, up 40.8 percent from a year earlier.
The interest payment made up 2.75 percent of their monthly income, the highest ratio among all surveyed income groups, the data showed.
Date
2011.08.24
According to the data by Statistics Korea, a household with two or more family members paid a monthly average of 74,083 won (US$68.9) in interest on debts in the April-June period, up 13.7 percent from a year earlier.
The amount accounted for 2.32 percent of the households' average monthly income. The debt-income ratio marked the highest ever since data started to be compiled in 2003.
The debt used in the data included loans for home purchases and other household expenses. If borrowing for business purposes was included, the ratio could have been higher, experts said.
The figures come as ballooning household debt has emerged as a major drag on the economy. As of the end of June, outstanding household credit stood at 876.3 trillion won, up 18.9 trillion won from three months earlier, according to the Bank of Korea (BOK).
The central bank's push to tighten its monetary policies also contributed to the higher financial burden from interest payments. The BOK has raised borrowing costs by a total of 1.25 percentage points since July last year.
Low-income earners were among the hardest-hit by the mounting interest burdens, the data showed.
Those in the lowest 20 percent income bracket paid an average of 31,880 won every month during the second quarter, up 40.8 percent from a year earlier.
The interest payment made up 2.75 percent of their monthly income, the highest ratio among all surveyed income groups, the data showed.
Source: Yonhap News (August 24,2011)