More salaried workers go into debt to buy homes

By Yi Whan-woo

A group chat for working moms on KakaoTalk mobile messenger frequently sees comments that they are stressed about making repayments for years as salaried workers.

Many of them are in their 40s, who, together with their husbands, took out loans from banks to buy an apartment as it is the most popular form of housing and, therefore, is considered a worthwhile investment.

“And surprisingly, the number of comments from these indebted individuals appears to be increasing in recent years,” said Shin Ji-kyung, an office worker whose spouse also sits behind a desk.

Shin is not wrong, according to Statistics Korea’s latest data, which showed that the average amount of debt for wage workers increased from 2022 to 2023.

The data showed the loans taken out by salaried workers nationwide averaged 51.5 million won ($35,100) in 2023. The amount slightly ticked up from 51.15 million won in 2022 after going down from 52.02 million in 2021.

“The finding suggests the costly borrowing rate has not been stopping salaried workers from living in debt,” Ha Joon-kyung, an economics professor at Hanyang University, said.

The professor referred to the Bank of Korea’s (BOK) benchmark interest rate staying at 3.5 percent from January 2023 to October 2024, before it was lowered to 3.25 percent and then to the current 2.75 percent.

The 3.5 percent base rate was the highest since December 2008, under the BOK’s monetary tightening campaign to bring down pandemic-induced inflation.

Of the 51.5 million won in 2023, mortgages were worth 20.38 million won. The amount of collateral loans backed by assets other than real estate totaled 17.54 million won, while personal credit loans amounted to 11.57 million won.

Compared to 2022, mortgages rose 3.7 percent, and other forms of collateral loans went up by 2.1 percent.

With regard to housing, the loans to buy an apartment averaged 62.65 million won in 2023. Over the same time period, the loans averaged 45.56 million won to buy an officetel, or a studio flat.

By age, the loans taken out by those in their 40s averaged 77.9 million won. The amount was higher than other age groups, including those in their 30s at 69.79 million won and those in their 50s at 59.93 million won.

The possibility of failing to make repayments on time was highest among those in their 60s. Their delinquency rate was 0.86 percent, comparable to 0.66 percent for those in their 50s and 0.65 percent for those in their 70s.