Household credit shrinks at sharpest pace in 13 years in Q4 amid high borrowing costs

• Published date: 22 February 2023
• Publication title: The Korea Times

Korea's household credit shrank at the sharpest pace in 13 years in the fourth quarter of 2022 amid high interest rates driven by the central bank's monetary tightening to bring down inflation, data showed Tuesday.

Outstanding household loans reached 1,867.0 trillion won ($1.44 trillion) at the end of December, down 4.1 trillion won from three months earlier, according to the preliminary data from the Bank of Korea (BOK).

It was the sharpest decline since the first quarter of 2009, when household credit contracted by 3.1 trillion won from the previous quarter. It also compared with an increase of 2.7 trillion won recorded three months earlier.

On a year-on-year basis, outstanding household credit expanded by 4.1 trillion won, which was also the smallest on-year increase since the fourth quarter of 2003, when it expanded by 7.3 trillion won.

Household credit refers to credit purchases and loans to households by financial institutions.

The decline was due to high borrowing...