S. Koreans' interest payment burden on the rise

SEOUL , May 31 (Yonhap) -- South Koreans' burden to pay interest on their debts has been on the rise due to growing household debt and climbing lending rates, data showed Tuesday, spawning concerns about potential defaults. The per capita annual interest payment burden came to 480,525 won (US$446.4) as of the end of March, up from 465,343 won from the previous month, according to data by the central bank and the state-run statistics agency. The March figures marked the largest amount since 486,838 won tallied for March last year, they said. The result is based on the assumption that South Korea's population would reach 48.99 million for 2011, according to Statistics Korea. As of end-March, banks' total household loans came in at 435.1 trillion won and the average rate on banks' household lending reached 5.41 percent as of the end of the first quarter. The result came as snowballing household debt caused headaches for Korean policymakers because rising interest rates will crimp households' capacity to service debt. But delaying a rate hike could also result in further growth of their indebtedness. The BOK earlier said that 13 percent of South Korean households failed to pay interest on their debts last year due mainly to a decline in income. South Korean households held financial debts worth 937.3 trillion won as of end-2010, up 8.9 percent from the previous year, according to the central bank.