Koreans spend more on interest payments than rent

 A noticeboard posted on a real estate agency in Seoul, March 17, reads that a studio flat is immediately avaialble for monthly rent. Yonhap

Koreans are spending more on monthly interest rate payments on their bank loans than monthly rent in the middle of persistently high borrowing rates, according to data, Thursday.The data compiled by Statistics Korea showed that the monthly interest rate payment for households nationwide averaged at 130,000 won ($96) in 2023, up 31.7 percent or 31,300 won from a year earlier.The pace of increase was the highest since 2019 when the statistics agency began to compile relevant data.The data also showed average spending on housing, such as monthly rent, stood at 111,300 won.The spending on housing by those owning a home or living on jeonse is compiled as “zero” in the statistics.Jeonse is an intermediary housing scheme that sits between monthly rent and ownership in Korea.Instead of paying monthly installments to a landlord, a large lump-sum payment is deposited for the duration of the contract.

While the spending on housing also increased 8.6 percent last year, which is the steepest since 2019, it was not as much as the soaring interest rate burden.“The 2023 finding is noteworthy,” Statistics Korea said, noting that monthly interest was never higher than the spending on housing for the previous nine years until 2023.It assessed higher interest payments than the spending on housing was due to the Bank of Korea’s (BOK) benchmark interest rate, which remains unchanged at 3.5 percent since January 2023.The rate is the highest since December 2008, resulting from an aggressive monetary campaign delivered by the BOK to curb pandemic-induced inflation.Whether the base will be lowered is uncertain, as inflation stays above 3 percent against the BOK’s target goal of 2 percent. Consequently, borrowers are likely to take the brunt of high interest 온라인카지노 rates for the time being.

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