"Can't You Buy a Home Without Loans?"…Debts of 30s and 40s Hit Record High

Household debt among those in their 30s and 40s in the Seoul metropolitan area has hit a record high, with the burden of loans for home purchases continuing to grow.

According to the Bank of Korea and Democratic Party lawmaker Moon Jin-seok, a member of the National Assembly's Planning and Finance Committee, as of the end of the second quarter this year, the average household debt balance per borrower in their 40s in the Seoul metropolitan area was 139.77 million won. This represents a 76.1% increase from 79.39 million won in the first quarter of 2013, marking the highest level since related statistics began being compiled.

During the same period, the average loan balance for those in their 30s in the Seoul metropolitan area more than doubled to 123.17 million won from 54.67 million won. The debt balance for those in their 40s in the Seoul metropolitan area has increased for 14 consecutive quarters since the first quarter of 2023, while those in their 30s have also recorded record-high levels.

The debt burden was even greater in Seoul. The average loan balance for borrowers in their 40s in Seoul reached 152.65 million won, an 89.1% increase from 2013. Those in their 30s in Seoul more than doubled from 54.93 million won to 127.54 million won during the same period, a 2.32-fold increase.

The age groups concentrated with household debt have also shifted. In 2013, those in their 50s and 60s and above held the top two positions for average loan balances in the Seoul metropolitan area, but from the end of 2018, those in their 40s rose to the top. Those in their 30s have also surpassed those in their 50s since the first quarter of 2021, becoming the second age group with the most debt.

Housing mortgage loans are at the center of the debt increase. On a nationwide basis, the average balance of housing mortgage loans held by borrowers in their 30s reached 234.19 million won in the second quarter this year, 2.67 times the 87.81 million won recorded in 2013. Those in their 40s also saw an increase from 95.95 million won to 185.86 million won, a 1.94-fold rise.

The share of those in their 30s was notable in new housing mortgage loan issuance as well. According to the Bank of Korea's second quarter household debt statistics by borrower, those in their 30s accounted for 43.7% of new mortgage loans, the highest among all age groups. Those in their 40s also accounted for 24.5%, bringing the combined share of the two age groups to 68.2%.

Housing prices continue to show an upward trend. According to apartment price trends for the third week of October released by Korea Real Estate Board, apartment sale prices in Seoul rose 0.13% from the previous week, marking 89 consecutive weeks of increases. Gyeonggi Province also rose 0.21%, while Suwon recorded the highest rate of increase at 0.40%.

With lending rates also rising, households' debt repayment burden is increasing. The average interest rate on new mortgage loans from deposit banks in August was 4.66% annually, rising for four consecutive months and reaching the highest level since November 2022.

Assuming a loan of 200 million won at an annual rate of 4.66%, monthly interest alone amounts to approximately 780,000 won. When principal repayment is included, the monthly burden becomes even greater. For households in their 30s and 40s, where housing and childcare expenses are concentrated, this is a significant burden.

However, recent new loan volumes have declined somewhat due to regulatory impacts. In the second quarter this year, the average new mortgage loan per borrower was 208.29 million won, down 21.1 million won from the previous quarter. Overall household loans in the financial sector announced by financial authorities in September also decreased by 2.2 trillion won from the previous month. However, mortgage loans increased by 3.3 trillion won during the same period, leaving the cumulative burden of housing-related debt intact.

Lawmaker Moon Jin-seok stated, "Since debt is concentrated during the time when people are buying homes and raising children, the burden of interest rates could lead to reduced consumption," and added, "We need to examine the repayment capacity by age group and develop measures to manage household debt."