SEOUL, June 22 (Xinhua) -- High-risk household debts in South Korea increased over the past year, boosting worry about debt delinquency amid the expected rate hike, central bank data showed Thursday.
The number of households, which have a high possibility to be unable to repay debts, reached 1,263,000 as of end-March in 2016, up from 1,097,000 a year earlier, according to the financial stability report submitted by the Bank of Korea (BOK) to the National Assembly.
The figure accounted for 11.6 percent of the total households having debts. Their financial debts amounted to 186.7 trillion won (163.5 billion U.S. dollars), taking up 21.1 percent of the combined household debts.
Among the high-risk households, the most risky households incapable of repaying debts by selling assets reached 315,000 as of end-March last year, accounting for 2.9 percent of the total households having debts. It was up 18,000 from a year earlier.
The debts owed by the most risky households amounted to 62 trillion won, up 15.6 trillion won from a year ago.
The most risky households were expected to increase in the coming months as the BOK was forecast to raise its benchmark interest rate.
The BOK lowered its benchmark rate from 3.25 percent in July 2012 to an all-time low of 1.25 percent in June last year.
The U.S. Federal Reserve raised its policy rate to a range of 1.00-1.25 percent, coming closer to the BOK's rate.
If the Fed hike rates further, foreign capital could abruptly flow out of the South Korean financial market, putting pressure on the BOK to lift its benchmark rate. BOK Governor Lee Ju-yeol recently hinted at higher policy rate.
The BOK report estimated that if the lending rate goes up by 1 percentage point, the number of the most risky households would increase by 25,000.
