Multi debtor number hits record high at 4.48 million

The population of "multi-debtors" – individuals in debt to three or more financial institutions – has skyrocketed to an unprecedented peak. A staggering 1.7 million borrowers now find their principal and interest payments eclipsing their earnings. As economic storm clouds gather, warning signals flare up in household and corporate debt spheres, notably with bank lending to small and medium-sized enterprises (SMEs) breaching the 1,000 trillion won threshold.

Data from the 'Household Loan Status' report, furnished to Rep. Yang Kyung-sook, a Strategy and Finance Committee member, by the Bank of Korea on Monday, revealed that multi-debtors stood at a robust 4.48 million as of June end. This figure is unparalleled since the inception of these specific data records. 22.6% of all household borrowers, which total 19.78 million, fall into the multi-debtor category.

The cumulative loan balance held by multi-debtors reaches 572.4 trillion won, breaking down to an average debt load of roughly 127.85 million won per individual. The persistently elevated interest rates led to delinquency rates among multi-debtors on an upward trajectory. By the end of June, this rate settled at 1.4%, marking a 0.1% uptick in March, the highest since the first quarter of 2020.

The average Debt Service Ratio (DSR) for multi-debtors was 61.5%. The DSR indicates the principal and interest repayment burden by dividing the principal repayment amount and interest by the annual income.

In the financial sector, a DSR above 70% suggests that most of the income, excluding minimum living expenses, must be used for debt repayment. This indicates that the debt burden on multi-debtors has reached a concerning level.


dhlee@donga.com