Bank of Korea: "Rising Interest Rates Vulnerable to Households That Borrowed to the Limit... Credit Risk Spreading Within Households"
4 Articles
4 Articles
(Seoul = Yonhap News) Reporter Han Ji-hoon = Korea, where households with larger loans for home purchases are more vulnerable to interest rate shocks and face a greater potential for the spread of credit risk within the household...
According to an analysis by the Bank of Korea on the debt of households that newly purchased homes between 2023 and 2025, high-borrowing households with a heavy burden of principal and interest repayment were hit harder than general households, with their delinquency rate rising by 0.81 percentage points for every 1 percentage point increase in interest rates; consequently, concerns are growing regarding the risk of cascading delinquencies and a…
The Bank of Korea has analyzed that households that took out large loans relative to their income to purchase a home are more vulnerable to interest rate shocks. For these households, when interest rates rise by 1 percentage point, the delinquency rate becomes 0.
Households with high borrowings, often referred to as "yeong-kkeul-jok" (borrowers who have taken out loans up to their limit), have been found to be the most vulnerable to rising interest rates. This means that households that purchased homes by taking on excessive loans, even if their income is not low, could face a direct hit from the interest rate shock. As the risk of delinquency for vulnerable groups, such as low-income earners and the sel…
Coverage Details
Bias Distribution
- 100% of the sources lean Right
Factuality
To view factuality data please Upgrade to Premium
