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Consumer debt rises at slowest pace in years

May 23,2019
Household debt is growing at the slowest rate in almost 15 years as loan screenings tighten and the housing market cools.

In the first quarter of 2019, outstanding household debt - which includes bank loans to individuals, loans from other institutions and credit cards balances - stood at 1,540 trillion won ($1.29 trillion), up 4.9 percent compared to the same quarter last year.

Growth is the slowest since the fourth quarter of 2004, when it also came in below 5 percent, the target of financial authorities.

Financial Services Commission Chairman Choi Jong-ku and other top finance officials have mentioned that the rate of increase in household debt should be less than 5 percent.

The accumulated debt is at a record, but the size of the increase is decelerating.

The quarterly increase of 5.2 trillion won is the lowest first-quarter increase since 2014.

The slowing pace is due to the government’s push to tighten lending criteria as part of efforts to tamp down the real estate market, the central bank noted in a statement.

A slowdown in the sale of houses, as well as seasonal factors, played into the slow pace of debt growth.

In the Korean housing market, transactions nationwide last month fell 20.5 percent from April the previous year.

According to the Ministry of Land, Infrastructure and Transport, only 57,025 housing units changed hands in April.

The figure is 36.2 percent lower than the five-year average for the month.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]