South Korea’s household debt hit 1,359.7 trillion won ($1.2 trillion) in the first quarter of 2017, reaching all-time high, data showed on Tuesday. The surge was mainly due to an increase in loans from the non-banking sector including savings banks, mutual finance, and credit associations.

According to preliminary data released by the Bank of Korea (BOK) on Tuesday, the balance of household credit reached 1,359.7 trillion won as of the end of March, up 1.3 percent or 17.1 trillion won from the end of December. The figure is the largest since the BOK started track the data from the fourth quarter of 2002.

Household credit best represents household debt as it includes not only loans from financial institutions including banks, insurance firms, private lenders, and public finance institutions but also credit card spending before payment.

Household credit increase of 17.1 trillion won in the January to March period is 3.5 trillion won less than a year ago when balance gained 20.6 trillion won. It is also less than a quarter ago when debt grew 46.1 trillion won.

Analysts, however, note that it is too early to conclude that household debt growth has slowed down. In general, rise in household debt tends to be limited in the first quarter as there is less demand for moving and greater affordability from year-end bonuses. Despite the low season for debt growth, the amount of household credit increase in the first quarter is the second-largest for that quarter. The average household debt growth in the January to March period was 4.5 trillion won in between 2010 and 2014 before household debt started to increase significantly.

Analysts note that household debt increase picked up in the first quarter of 2017 as individuals took out loans to benefit from cheap interest rate environment and eased property regulations. The rise in household credit also comes despite the government’s enhanced measures to curve household debt by introducing stricter credit evaluation guidelines and apartment subscription regulations.

By Boo Jang-won

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