SEOUL, Aug. 28 (Xinhua) -- Household debts vulnerable to repayment because of low credit and low income rose in the past year, boosting worries about the debt-servicing capability amid the expected interest rate hike, a central bank report said Monday.
The so-called vulnerable household debts reached 79.5 trillion won (71 billion U.S. dollars) as of the end of March, according to the Bank of Korea (BOK) report submitted to the National Assembly.
It was up 6 trillion won compared with 73.5 trillion won tallied at the end of 2015.
The vulnerable debt refers to those extended to households with low credit and low income which borrowed money from at least three financial institutions.
The record-low borrowing costs had encouraged households to spend money and purchase home with borrowed money.
The BOK lowered its benchmark interest rate from 3.25 percent in July 2012 to an all-time low of 1.25 percent in June last year.
The debt-servicing burden for the vulnerable households was forecast to get heavier on expectations that the BOK would raise its policy rate in the foreseeable future.
The U.S. Federal Reserve lifted its benchmark rate to a range of 1.00-1.125 percent, nearing the BOK's policy rate.
The so-called dangerous household debts, which have the ratio of debt repayment to disposable income at more than 40 percent, came in at 62 trillion won as of the end of 2016, up 15.6 trillion won from a year earlier.
The ratio of household debts to the country's gross domestic product (GDP) came to 91 percent as of the end of 2015. It was 18.6 percentage points higher than the average ratio recorded by member countries of the Organization for Economic Cooperation and Development (OECD).
