Debt among those in their 20s and 30s jumped more than 27 percent over the past three years since the COVID-19 pandemic hit, indicating they suffered financial difficulties due to rising home prices and an economic slowdown, central bank data showed Sunday.
In the fourth quarter of 2022, overall loans extended to those in the age bracket soared 27.4 percent to 514.5 trillion won ($383.96 billion) from 404 trillion won in the fourth quarter of 2019, according to a report submitted by the Bank of Korea to the National Assembly's Strategy and Finance Committee.
Those young debtors borrowed an average of 70 million won per person from banks and 54 million won from the nonbanking sector during the cited period. The nonbanking sector includes savings banks, insurers, credit firms and securities firms.
Given their loan default rates are on the rise, their financial difficulties are expected to deteriorate if interest rates remain high and an economic downturn prolongs.
"The indebted young adults will likely reduce consumption due to high rates and high consumer prices, which will weigh on the overall economy. So the government needs to preemptively come up with measures to support them," Rep. Yang Kyung-sook of the main opposition Democratic Party said.
The country's overall bank loans rose 17.7 percent to 902.2 trillion won in the fourth quarter of 2022 from 766.8 trillion won in the fourth quarter of 2019, the BOK data showed.
Loans extended by the nonbanking sector were up 8.7 percent to 509.1 trillion won from 468.5 trillion won during the mentioned period. (Yonhap)
