South Korea’s Young Households Face Rising Debt Risks
South Korea is experiencing a surge in high-risk households, particularly among young adults in their 20s and 30s, burdened by debt accumulated through home purchases and stock investments. As of March 2025, the number of these households reached 459,000, an 18.9% increase year-over-year, with the proportion of high-risk borrowers rising from 3.2% to 4.0% .
Defining High-Risk Households
A “high-risk household” is defined as one with a debt service ratio (DSR) exceeding 40% and a debt-to-assets ratio (DTA) above 100%. This indicates that over 40% of a household’s income is dedicated to debt repayment, and even liquidating all assets would not fully cover outstanding loans.
Youth Debt Trends
The proportion of young people (ages 20-39) among these high-risk households has increased significantly, reaching 34.9% in March 2025, up from 22.6% in 2020 . This contrasts with a decline in the proportion of middle-aged (40s-50s) and elderly households, falling to 53.9% and 11.2% respectively, compared to 59.8% and 17.6% in 2020.
The financial debt held by young, high-risk households has more than doubled in the past five years. From an index of 100 in March 2017, it rose to 134 in March 2020 and further to 318 in March 2025 . Over eight years, young people’s debt has more than tripled.
Bank of Korea Concerns and Policy Implications
The Bank of Korea (BOK) has expressed concern over this trend, warning that a delayed recovery in the housing market and adjustments in financial asset prices could significantly increase the repayment burden for these households, especially those with rapidly increasing debt . In October 2025, BOK Governor Rhee Chang-yong cautioned against increasing liquidity, fearing it could further fuel the real estate market .
The BOK has also noted the complexities of addressing real estate overheating, linking it to income distribution, population concentration in Seoul, and household debt levels, suggesting that structural changes are necessary .
Broader Economic Context
The rise in youth debt is linked to trends like “Youngkkeul” (borrowing to the limit) and “Bittu” (investing with loans), fueled by increased liquidity and rising asset prices during the COVID-19 pandemic . While the loan-to-income ratio (LTI) for young people has increased, the debt service ratio (DSR) has shown a downward trend since 2017 .
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