"Jeonse" loans by people in 20s and 30s surged in past five years
Updated: 2021-10-22 15:07:41 KST
Amid rising property prices in Korea, the amount of "jeonse" loans to people in their 20s and 30s has surged in the last five years.
Jeonse refers to a housing lease system unique to Korea whereby tenants pay a lump-sum deposit instead of monthly rent on a two-year contract. To afford this deposit, many people take out large loans.
According to data from the Financial Supervisory Service, the outstanding balance of jeonse loans increased by more than 50 billion U.S dollars from 2017 to June 2021.
The outstanding balance of jeonse loans is especially high among people in their 20s.
The jeonse debt held by people in that age group was about 3.six billion dollars in June 2017.
However by June 2021, that figure skyrocketed to around 20 billion dollars.
There have been concerns among lawmakers over financial vulnerability due to growing household debt.
And there have been on-going discussions over whether to apply a debt service ratio to jeonse loans to limit the amount people can borrow.
However, Koh Seungbeom Chairman of the Financial Services Commission said on Friday that at least for now.the government is not considering applying a DSR to jeonse loans because it would harm those who need such loans.
Government will announce measures to handle household debts on October 26th.
Seo Eunkyung, Arirang News.