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Household debt reaches record $1.4 trillion

Published: 19 Aug. 2025, 18:38 Updated: 19 Aug. 2025, 20:42

Apartment complexes are pictured in Seoul on Aug. 3. [NEWS1]

Korea’s household debt climbed to a record 1,952.8 trillion won ($1.4 trillion) in the second quarter of 2025, fueled by aggressive borrowing for housing and stock investments.

Outstanding household credit stood at 1,952.8 trillion won as of the end of June, up 24.6 trillion won, or 1.3 percent, from the first quarter of this year, according to data the Bank of Korea (BOK) on Tuesday. The figure surpassed the previous record of 1,928.7 trillion won logged in the first quarter of 2025.

Household credit refers to the combined amount of loans taken out by households from financial institutions and unpaid credit card balances. It is used as an indicator of household credit conditions and the overall scale of credit supplied to households.

According to the BOK data, the quarter-on-quarter household credit increase in the second quarter of 2025 was tenfold that of the first quarter of 2025. The central bank attributed the surge to a rush in housing transactions, particularly mortgage lending, ahead of new lending rules implemented on June 27.

This was the largest increase since the third quarter of 2021, when household credit jumped by 35 trillion won. Household credit increased by 2.3 trillion won in the first quarter of this year, while quarterly growth last year remained in the 10 trillion won range.

The rise in household credit this year came as the real estate market showed signs of overheating, leading to an expansion of household loans centered on mortgages.

Mortgage loans increased by 14.9 trillion won from the first quarter, reflecting sustained growth in housing transactions since February. Other loans, including personal loans and margin lending from securities firms, rose by 8.2 trillion won.

All types of lending institutions reported growth. Deposit banks expanded lending by 19.3 trillion won while nonbank deposit-taking institutions added 3 trillion won. Other financial institutions increased by 900 billion won.

“Growth in mortgage loans and margin lending from securities firms drove the second quarter increase in household credit,” said Kim Min-soo, head of financial statistics at the BOK. “Mortgage loans for housing purchases could continue to rise for some time. Although housing prices in the Seoul metropolitan area have started to stabilize, it remains to be seen whether this trend will hold.

“The BOK will closely monitor household debt through macroprudential policy coordination with the government to prevent financial easing from fueling instability in the housing market.”

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY BAE JAE-SUNG [[email protected]]