Rising costs, job market contraction drive surge in financial struggles among young adults

With housing prices and other costs rising for years and the job market recently contracting, the rate of young people in their 20s failing to repay debts on time has emerged as the highest across all age groups. Among those in their 20s, the number of "credit delinquents" -- individuals who have failed to repay debts for over three months or pay taxes for a year -- has surged by 25% over three years. Concerns over economic hardships faced by the younger generation are growing, as cases of young people traveling to Cambodia to earn money only to fall victim to crime have also occurred in succession.

According to data on "household loan status by age group" from five major banks -- KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup -- on the 17th, the average household loan delinquency rate for those in their 20s stood at 0.41%, the highest among all age groups. This was followed by those in their 50s (0.37%), 40s (0.35%), aged 60 and above (0.32%), and 30s (0.23%). The delinquency rate for those in their 20s rose by 0.02 percentage points from a year ago, at the end of June last year (0.39%). The household loan delinquency rate refers to the proportion of loans where repayment of principal and interest has been delayed for over one month.

For instance, as of July, the credit loan delinquency rate for those aged 20 and below at one commercial bank was 0.80%, significantly surpassing the rates for those in their 30s (0.37%), 40s (0.37%), 50s (0.37%), and aged 60 and above (0.62%). Since the COVID-19 pandemic, housing prices and costs have continued to rise, leading younger people to take on more debt for living expenses and home purchases. However, delayed entry into the job market has gradually weakened their repayment capacity.

The number of young people in their 20s becoming credit delinquents is also increasing. According to data on "credit delinquents by financial sector" received by the office of Democratic Party of Korea Representative Lee Kang-il from the Financial Supervisory Service, as of the end of July last year, 65,887 individuals in their 20s were registered as credit delinquents with the Korea Credit Information Service, a surge of 25.3% from the end of 2021 (52,580 individuals). This growth rate far exceeds the 8% increase in the total number of credit delinquents nationwide, which rose from 548,730 to 592,567 over the same period. A source from the financial sector stated, "To reduce the debt burden on the younger generation, it is necessary to expand income and employment opportunities, as well as provide economic and financial education and financial counseling services."

20s Post Highest Household Loan Delinquency Rate