South Korea’s household debt hit a new peak late last year, albeit at a slower pace due to the government’s tightened lending standards to cool the heated housing market.
Household debt totaled 1,534.6 trillion won ($1.36 trillion) as of December 2018, up 5.8 percent from the same period a year earlier, according to the Bank of Korea on Friday. Despite the all-time high debt levels, the pace of growth was the slowest in five years, with annual debt gains falling below 100 trillion won for the first time in four years.
The total debt shouldered by Korean households jumped 10.9 percent in 2015 and 11.6 percent in 2016 on record-low interest rates and relaxed mortgage lending restrictions. But annual growth started to weaken following the government’s stricter lending rules, slowing to 8.1 percent in 2017 and 5.8 percent in 2018.
In September 2018, the Moon administration imposed tougher taxes on property ownership to rein in the speculative housing bubble in certain overheated zones across the country. In October, it followed up with tighter debt service ratios in hopes of further dialing down the frenzied home buying.
By Lee Yoo-sup and Kim Hyo-jin
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