South Korea's household debt in the second quarter of this year reached a record 1,130 trillion won, according to the Bank of Korea.
This is the highest figure since the government first released the statistics of household credit in 2002. The figure is an increase of 32 trillion won from the previous quarter.
Industry watchers said the debt surge was fueled by a series of rate cut since August of last year and the easing of the loan-to-value and debt-to-income ratios.
Cho Young-moo, a researcher at LG Economic Research Institute, said "The issue here is not the figure itself but the speed of an increase," adding that, "The growth pace of Nominal gross domestic product and household earnings are 3 percent while the surge of household debt stands at around 7 to 8 percent."
Experts warned that if the mounting household debt continues amid the growing global economic uncertainties including the U.S. rate hike, China's possible economic hard-landing and the downward trend of international oil price, it would negatively affect the entire national economy.
The ruling Saenuri party proposed a bill on Tuesday, which will allow the Bank of Korea to figure out financial information of borrowers in an effort to accurately analyze household debts.
