Staff Reporter
Households are at a standstill in improving debt payment capability on rising debt without income growth, according to the Bank of Korea (BOK) on Tuesday.
``Households have shown improvement in credit card debt repayments, but they have increased housing loans amid slow growth in disposable incomes,’’ the bank said.
Household debt, which had declined after the credit card bubble burst in 2003, jumped 11.2 percent in 2005 from 2004.
Households’ financial assets in that period rose 8 percent. The ratio of financial assets to financial debt inched up 1.4 percentage points to 50.4 percent last year from the previous year.
The ratio is higher than 20 to 30 percent in advanced nations, including the Unite States and Japan, the BOK said.
One of the key reasons for the high debt-to-financial assets ratio is that Koreans are heavily reliant on properties as a means to boost their assets.
Households’ disposable income rose 3.6 percent in 2005 from 2004, far lower than the 11.2 percent debt growth.
The ratio of disposable income to financial debts rose to 1.4 percent last year from 1.3 percent in 2004.
Accordingly, households are expected to be sensitive about interest rate hikes that will raise their interest costs. As of January this year, 86.7 percent of household debt is linked to money market rates.
Source: The Korea Times
At www.4CreditCardHelp.info we can help YOU ELIMINATE your credit card debt legally and morally. You can start today by filling out our survey at www.2stopthestress.com. By answering our survey, you are incurring NO obligation. We evaluate your information and contact you if we can help you. All information you give us is strictly confidential. We will not give, sell or distribute your information to anyone.