Household loans in South Korea jumped by $3.1bn in May, the largest monthly rise since August 2024, driven by lower borrowing costs and equity market gains.
South Korea’s household debt rose sharply in May, with loans increasing from $1.4 bn to $4.5bn, the fastest monthly gain since August 2024. Lower borrowing costs and a stock market rally fueled consumer confidence, encouraging investment in leveraged assets like ETFs.
The surge in debt coincides with a 12-month high in investor deposits at securities firms, as retail participation in AI- and semiconductor-related stocks surged. However, the debt-to-income ratio remains elevated at 174%, raising concerns over financial stability amid volatile market conditions.
Much of the new borrowing came from personal credit lines and overdraft accounts, leaving households exposed to potential market corrections. Analysts warn that sustained debt growth could weaken balance sheets further.