SEOUL, KOREA- The default rate for household credit loans has increased to the highest level in six years.
Analysts said this is due to a rise in the number of households who are unable to pay back their debts from protracted recession since the 2008 Global Financial Crisis. According to the Financial Supervisory Service on July 1, the household credit loan default rate in May was 1.26 percent, up 0.1 percentage point from the previous month. This is the highest level since February 2007 when the rate was 1.27 percent.
The default rate has hovered below the 1-percent level for years since late 2009. The rate surpassed the 1-percent level in January this year to 1.08 percent and has since crept up. Kwon Chang-woo, Financial Supervisory Service senior manager responsible for household debt management, said, "This may be due to the worsened ability for the household to pay back their outstanding debt because of adverse economic conditions especially at consumer level."
As for home mortgage loan default rate, it was 0.93 percent as of the end of May, up 0.02 percentage point from the end of April. The collective mortgage loan default rate for large-scale apartment complexes has also risen to 1.93 percent from April's 1.88 percent.
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