Bank of Korea Warns Heavily Borrowing Homebuyers Face Higher Family Delinquency Risk

Households that borrowed heavily to buy homes face a higher risk of delinquency when interest rates rise, and the danger can extend beyond the person who took out the loan, the Bank of Korea said.

The central bank identified the top 10% of households that bought homes between 2023 and 2025 and recorded the largest increases in principal and interest payments relative to income as the most vulnerable group in a high-interest-rate environment.

The Bank of Korea said its analysis expanded household-debt research from the individual level to the household level for the first time. It created a database using Korea Credit Bureau information to track the assets, debts, income and spending of 2.06 million households each month.

The bank said assessing a household’s repayment capacity requires examining the financial positions of spouses, children and other members, not just the borrower. It reported that a 1 percentage-point rise in interest rates would increase the delinquency rate among heavily indebted homebuying households by 0.81 percentage points after 12 months.