In the first half of this year, the number of people in their 20s who received debt relief through individual workouts more than doubled from five years ago. The amount of forgiveness has more than tripled over the same period. It is pointed out that the ‘warning sound’ of youth debt is growing due to job instability and housing cost burden. According to the data submitted by Rep. Choi Seung-jae of the National Assembly Political Affairs Committee from the Credit Recovery Committee, 4,654 people in their 20s who were confirmed for principal reduction through personal workouts as of the first half of this year
. It more than doubled compared to the first half of 2018 (2,273), recording the highest number in five years based on the first half. Personal workout is a system that helps those who have too much debt to pay off their debts through mediation by the Credit Recovery Committee to reduce their debts by up to 90% and lower their interest burden.
As of the first half of the year, the number of people in their 20s whose debts were forgiven through this system continued to increase, with 2273 in 2018, 2325 in 2019, 3850 in 2020, and 4019 in 2021. Last year, the number decreased to 3,509, but it turned to an increase again this year. Most of the other age groups showed an increase compared to the same period last year, but it did not reach the level of 2020-2021, which was the time of Corona 19.
The amount of principal reduction debt for those in their 20s also increased significantly. It more than tripled from 12 billion won in the first half of 2018 to 41 billion won in the first half of this year. The average amount of reduced debt per person also increased the fastest among those in their 20s.
The average exemption amount per person in their 20s was 8.8 million won as of the first half of this year. Compared to 5.3 million won in 2018, it increased by 67%스포츠토토, showing the highest rate of increase among all age groups. Due to the characteristics of those in their 20s who are not engaged in economic activities or are just starting out, the average reduction amount itself was the smallest among all age groups. For the other age groups, the average reduction amount per person was between 10 million and 20 million won.
It seems that the young people who are suffering from living difficulties due to high interest rates and high prices have reached individual workouts in a situation where they have not been able to get a proper job due to high interest rates and high prices. Rep. Choi Seung-jae pointed out, “The reason for the increase in individual workouts for young people is that they cannot find a job even if they want to work during the corona period, and their income has decreased.” As a result, the delinquency rate of home mortgage loans in their 20s is the highest ever.
According to the data on the ‘Status of Mortgage Loan Delinquency Rate by Age’ submitted by banks (local, regional, and Internet banks) through the Financial Supervisory Service to Rep. Yang Kyung-sook of the National Assembly’s Planning and Finance Committee, the delinquency rate of those in their 20s and younger as of the end of the second quarter. (Based on overdue principal and interest for more than one month) was 0.44%. Banks explain that it is not only the highest in about five years since the end of the third quarter of 2018, but also the highest level ever.
It is expected that the delinquency rate of young people with a weak income base will continue to rise for the time being. In the ‘Financial Stability Report’ released in June, the Bank of Korea said, “The proportion of household loans for borrowers in their 30s or younger has increased from 29.6% in 2013 to 2019 to 38.3% in 2020 to 2021.” We should keep in mind that the delinquency rate of household loans handled after 2020, centering on those in their 30s or younger, will rise higher than expected for a while,” he warned.
It is pointed out that measures are urgently needed as excessive debt among young people can eventually lead to financial instability, contraction of consumption and even low birth rate. Rep. Choi added, “As various crisis signals are detected, such as the increase in bank delinquency rates among young people and the increase in non-payment of interest on small livelihood loans, it is urgent to discuss fundamental solutions to the youth’s debt problem and improve their ability to repay.”