Lee, who lives in Gyeonggi province and has been working as a middle school teacher for 5 years, now spends half of his monthly salary of 2.3 million won(1748 dollars) to pay off his loan.
The value of his apartment, which had risen to 300 thousand dollars in 2022, has now fallen by half. “I’ve been eating less and buying less to pay the interest, and I’m completely worn out at the moment,” Lee said.
The 20s and 30s in Korea, who ‘yeoung-ggeul’ed(a Korean portmanteau that translates to ‘scraping together your soul to invest’) homes with heavy loans two to three years ago, are now feeling the impact of high-interest rates and falling home prices.
Heads of the household aged 39 and under had an average of 255 thousand dollars in assets as of March this year, which is 7.5% less than the previous year, according to a survey conducted by the Bank of Korea, the Financial Supervisory Service, and Statistics Korea.
Also, the decline in assets of households headed by the so-called 2030 generation(born from the mid-1980s to the mid-1990s) was higher than other age groups. The age groups of those in their 40s, 50s, and 60s and above experienced a decline in assets by 5.3 percent, 5.9 percent, and a slight increase of 0.9 percent, respectively.
Due to the decline in assets, 2030 generation-headed households have the highest debt-to-asset ratio, which reflects their poor financial health. Households under 30 have a debt-to-asset ratio of 29.6 percent, up 1.5 percent from last year, meaning that about one-third of their assets are covered by debt.
Among people in their 30s and above, those in their 40s had the highest debt-to-income ratio of 22.3 percent, followed by those in their 50s with 17.7 percent, and people in their 60s had 11.3 percent. The average debt-to-income ratio for all age groups was 17.4 percent.
The delinquency rate of young people who borrowed money from banks has increased, especially those in their 20s.
The delinquency rate of mortgage loans for people in their 20s and younger was 0.39 percent at 19 banks, including commercial banks, local banks, and internet banks, as of the end of September 2023, according to Representative Yang Kyung-sook of the main opposition Democratic Party of Korea.
The delinquency rate among people in their 20s and younger was the highest among all age groups, increasing by 0.15 percentage points from the previous year (0.24 percent).
On the other hand, the delinquency rate for those in their 30s was 0.20 percent, which is half the rate of the younger group. However, it doubled from the previous year. For individuals in their 40s and 60s and older, the delinquency rates were 0.23 percent and 0.25 percent, respectively.
This article was originally published on Dec. 12, 2023.
