As the interest rate cut is delayed, the number of multiple borrowers has increased to an all-time high.

It is estimated that 4.5 million people have borrowed as much as they can from three or more sources, and 2.79 million people will have to use most of their income to repay debt.

According to the 'Status of Household Loans for Multiple Borrowers' submitted by the Bank of Korea to Rep. Yang Kyung-sook of the National Assembly's Planning and Finance Committee, the number of domestic household loan borrowers with multiple borrowers was 4.5 million as of the end of the third quarter of last year.

Multiple debtors are borrowers who have received loans from three or more financial institutions and are the most vulnerable to high interest rates, so they are subject to intensive monitoring and management by the Bank of Korea and financial authorities.

The proportion of multiple borrowers among all household borrowers (19.83 million) was 22.7%, which also reached an all-time high.

However, their total loan balance (KRW 568.1 trillion) and average loan amount per person (KRW 126.25 million) decreased by 4 in 3 months compared to the second quarter (KRW 572.4 trillion, KRW 127.85 million). 3 trillion won, a decrease of 1.6 million won.

The average delinquency rate for multiple borrowers was 1.5% as of the end of the third quarter of last year, the highest level in four years since the third quarter of 2019 (1.5%).

Their average total debt service ratio (DSR) is 58.4%, meaning that about 60% of their income must be used to repay principal and interest.

DSR is the amount of principal and interest that the borrower must repay in a year divided by annual income. Usually, if DSR is around 70%, it is considered a situation where the principal and interest must be repaid with most of the income excluding the minimum living expenses.

26.2% (1.18 million people) of multiple debtors had a DSR exceeding 70%, and 14.2% (640,000 people) had a DSR exceeding 100%.

Among multiple borrowers, the burden of repayment is even more severe for borrowers with low income and credit ratings.

Multiple borrowers with low income (bottom 30% of income) or low credit (credit score of 664 points or less) are defined as 'vulnerable borrowers', and as of the end of the third quarter of last year, they accounted for 6.5% of all household borrowers.

The proportion increased by 0.1 percentage points (p) from the previous quarter (6.4%) and is the highest in three years since the third quarter of 2020 (6.5%).

As of the end of the third quarter, the average DSR of vulnerable borrowers was 63.6%, and 35.5% (460,000 people) of vulnerable borrowers had a DSR of more than 70%.

The Bank of Korea also stated in its financial stability report at the end of last year, “The loan soundness of vulnerable sectors is deteriorating, with the delinquency rate of household loans for vulnerable borrowers and non-bank financial institutions rising sharply,” adding, “As borrowers’ DSRs rise, high DSRs exceed the consumption critical level.” “If the number of borrowers increases, this may lead to a decline in the borrower’s propensity to consume, which may limit household consumption in the long term,” he warned.

(Photo = Yonhap News)