More than half of Korean households owed debts to local banks in 2011 as they borrowed money to help support living costs, a poll showed Thursday.
According to the survey of 2,030 households by the Bank of Korea, 54 percent of them borrowed money from financial institutions as of December of last year. Among the surveyed households, 22.5 percent of them replied they had taken out fresh loans between July and December last year.
Of the recently indebted households, 32.2 percent of them said they had taken out loans to support the cost of living.
Heavy household debts are cited as a key risk to the South Korean economy this year as debt-laden consumers are focusing on repaying loans rather than on spending, which would boost growth.
Korea’s outstanding household debts, which include loans and credit purchases, stood at a record 892.5 trillion won ($794.8 billion) at the end of September.
The BOK survey showed that inflation and an economic slowdown were the two biggest economic challenges for household finances in 2011.
Around half of the respondents said the government should put its top priority on stabilizing consumer prices and real estate prices.
More than 70 percent of the households said the central bank should count inflation and real-estate price stability as key concerns in their monetary policy decision-making, according to the poll.
