Increasing Gap between Gangnam and Gangbuk of Household Loan Arrearage

The rate of household loan arrearage between the residents of northern and south Seoul is gaping seriously.

According to investigation, among the branch offices of a same bank, the rate of household loan arrearage in the northern branch office is dozens of time higher than the branch offices in the south of Han River.

On 14th May, according to the business world, the Dogok branch of the A Bank has reported a drop in the arrearage rate from 0.15% to 0.02%. Meanwhile in the Sang-geh branch office, the rate went up from 0.06% to 0.6%.

The arrearage rate in the Uijongbu and Inchen branches are 0.71% and 0.67% respectively. These rates are higher than other northern regions of Seoul. Other banks have similar situations.

The Banpo branch of the B Bank has reported an arrearage rate of 0.14% in last April, however the rate reported from Byun-dong branch is 0.87%. Last year, these same branches have reported similar arrearage rates of 0.08% and 0.09% respectively.

The rate of arrearage in the D Bank’s Samsung branch has increased from last year’s 0.06% to 0.11% by end of last April. Meanwhile the rate in Ki-rum branch has increased by big difference from 0.41% to 0.59%.

This increase in arrearage rate is due to prolonged economic stagnation. It is analyzed that the lower income group is affected more heavily by this situation.

The bank officials report that the increasing numbers of low income group, who are residing in the outskirt of northern Seoul, are remising their house mortgages payments. By this phenomenon, the banks are concerned that increasing household loan arrearage rate in the credit loan and credit card businesses might spread to comparatively stable house mortgage loans.

The Cho Hung Bank has ordered its branch offices to critically monitor the clients who have received house mortgage loans and manage their credit line strictly.

“Especially among the households residing in the northern skirt of Seoul, increasing number of cases are remising their interest payments,” says a Woori Bank official.

Chi-Young Shin higgledy@donga.com