Youngest and oldest investors face highest loan default rates in South Korea

South Korea's youngest and oldest investors are facing the highest rates of loan default, according to recent financial data. Individuals aged 20 and below, and those aged 60 and above, are disproportionately struggling to repay loans taken out to invest in the stock market.

This vulnerability stems from their typically lower incomes and limited financial resources. When the stock market experiences sharp downturns, as it has recently, these investors are more susceptible to significant losses. The data, submitted by the Financial Supervisory Service, shows that as of the end of June, the credit loan default rate for borrowers aged 20 and under was 0.67%, and for those aged 60 and over, it was 0.59%. Both figures are considerably higher than the overall default rate of 0.35%.

Even though the loan amounts borrowed by these age groups are smaller compared to middle-aged borrowers, their default rates remain elevated. For instance, the total outstanding credit loans for those aged 20 and under amounted to 3.6 trillion won, while those aged 60 and above had 10.6 trillion won in outstanding credit loans. In contrast, borrowers aged 30 to 50 had between 20 to 30 trillion won in outstanding credit loans.

A similar pattern is observed with overdraft accounts. Borrowers over 60 have a default rate of 0.37%, and those under 20 have a rate of 0.33%. Both exceed the overall overdraft default rate of 0.22%. The recent market crash has intensified concerns for these investors, who may find themselves unable to sell their investments due to losses and are burdened by accumulating interest payments, forcing them to cut back on daily expenses.