One out of every five younger Koreans between the ages of 19 and 39 is found to be in debt three times higher than their income. This substantial debt is due to the skyrocketing housing market and the overheated stock market, leading Koreans in their 20s and 30s to take out loans and use the money to invest fully.
According to a report titled 'The Current Status of Assets and Responses of Young Adults in South Korea' by the Korea Institute for Health and Social Affairs, as of 2021, 21.75 percent of young adult heads of households aged 19 to 39 had a debt-to-income ratio (DTI) of 300 percent or higher, which represents a 2.6-fold increase from 8.37 percent in 2012. The debt-to-income ratio (DTI) compares how much you owe each month to how much you earn.
The average debt of young adult heads of households aged 19 to 39 was 84.55 million won as of 2021, including those without any debt. If young Koreans without debt are excluded, the average debt rises to 115.11 million won.
In the report, the state institute pointed out that younger Koreans who took out loans and used the money to invest are struggling due to increased interest rates, decreased housing prices, and plummeting coin prices. It added that a prolonged economic downturn is highly likely to cause those younger Koreans who are less financially stable to become socially marginalized going forward.