South Korea's debt crisis deepens as 459,000 households face financial collapse
More than 80,000 additional Korean households fell into the high-risk category between March 2024 and March 2025, as debt repayment burdens became harder to bear. These households are spending nearly half their income on principal and interest payments, and the number of 'high-risk households' - those unable to repay their debts even after selling off all their assets - reached 459,000. The problem is spreading especially quickly among people in their 20s and 30s and in regions outside Seoul. The Bank of Korea presented its March 2026 assessment of financial stability at the regular Monetary Policy Board meeting on Thursday. The central bank defines high-risk households as those with a debt service ratio above 40 percent and a debt-to-asset (DTA) ratio above 100 percent. As of March of last year, the number of high-risk households in Korea stood at 459,000, up 18.9 percent from 386,000 a year earlier. High-risk households accounted for 4.0 percent of all households, up from 3.2 percent a year earlier. The financial debt held by those households totaled 96.1 trillion won ($63.9 billion), accounting for 6.3 percent of total household financial debt. The spread among younger people was especially pronounced. Households headed by people in their 20s and 30s accounted for 34.9 percent of all high-risk households in 2025, up more than 12 percentage points from 22.6 percent in March 2020. That contrasted with middle-aged households headed by people in their 40s and 50s and older households, whose shares fell to 53.9 percent and 11.2 percent, respectively, from 59.8 percent and 17.6 percent in 2020. Polarization within the financially vulnerable groups is also deepening. The average DTA for high-risk households in Seoul fell to 125.3 percent in 2025 from 136.2 percent in 2024. Rising home prices lifted asset values and slightly improved debt repayment capacity. Outside Seoul, however, the DTA for high-risk households stood at 132.9 percent in 2025, down only slightly from 136.4 percent in 2024 and still at a high level. The Bank of Korea's estimate for the end of 2025 was 133.7 percent. 'Even though interest rates have been cut, the burden on vulnerable borrowers and high-risk households has not eased enough because the economy has not recovered evenly,' said Deputy Governor Chang Cheong-soo. 'If interest rates rise again, the burden of repaying principal and interest in vulnerable sectors will inevitably increase further.' The percentage of vulnerable borrowers - those with multiple debts, low income or low credit - rose from 6.4 percent in the third quarter of 2025 to 6.7 percent in the fourth quarter. The percentage of potentially vulnerable borrowers also continued to climb over the same period, from 17.8 percent to 18.0 percent. Loans to vulnerable self-employed borrowers in particular rose to 114.6 trillion won ($76 billion) at the end of 2025 from 113.5 trillion won at the end of 2024. 'The authorities need to continue targeted support for self-employed people facing temporary difficulties,' the Bank of Korea said. 'At the same time, they need to steadily pursue restructuring measures, including support for business closures, in cases where the chances of recovery are low.'
Read also:
- Peptide YY (PYY): Exploring its Role in Appetite Suppression, Intestinal Health, and Cognitive Links
- Toddler Health: Rotavirus Signs, Origins, and Potential Complications
- Digestive issues and heart discomfort: Root causes and associated health conditions
- House Infernos: Deadly Hazards Surpassing the Flames
