SEOUL: South Korea's household debt, a major economic risk factor, rose sharply last year, raising concerns about an increase in defaults, a private credit appraiser reported Sunday.
At the end of December, financial institutions had 722.8 trillion won $642 billion in outstanding loans to the household sector, up 6.9 percent from a year earlier, according to the Korea Credit Bureau.
The figure included 124.1 trillion won in unsecured household loans, up 19.4 percent from a year ago, and 311.5 trillion won in mortgage loans, up 9.5 percent, it said.
The bureau warned that an increase in interest rates would turn more household debts sour.
Last week the Bank of Korea left its key interest rate unchanged at 2.75 percent despite concerns about inflation.
Annual inflation reached 4.1 percent in January, prompting the finance ministry to announce a series of measures aimed at curbing price rises.
In early January, the government launched a task force involving financial regulators, government officials, bankers and experts to curb the excessive growth of household loans.
Financial regulators say excessive household loans, if unchecked, could erode economic growth potential or lead to the insolvency of financial institutions and families.
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