South Korea’s household borrowing tops $1.4 trillion amid investment surge

South Korea's household debt hit a record 2 quadrillion won (US$1.4 trillion) in the second quarter, as borrowing for housing and stocks surged to the highest quarterly increase since 2021. The Bank of Korea reported that household credit rose 25.9 trillion won, bringing the total to 2.02 quadrillion won by the end of June. Household loans alone increased 24.9 trillion won to 1.89 quadrillion won, the largest quarterly jump since the third quarter of 2021.

Housing-related loans jumped 12.2 trillion won, accelerating from an 8.1 trillion-won rise in the first quarter. The central bank attributed the increase to more housing transactions, which came as a strong stock market encouraged households to borrow for equities, a practice known as "bit-tu." The BOK expects such loans to grow less in the third quarter as the market has weakened.

Household debt-to-nominal GDP ratio is currently 85.3%, with the government aiming to reduce it to below 80% by 2030.