South Korea's financial authorities plan to hold down growth in household debt to the four percent range next year from the current eight percent range.
The figure had steadily declined from eight-point-one percent in 2017 to four-point-one percent in 2019, but climbed back up to the eight percent range last year amid the COVID-19 pandemic.
Under the circumstance, financial authorities set the goal of reducing the figure back to the four percent range next year before it is too late.
To that end, authorities plan to tighten loan regulations and expand the application of debt service ratio (DSR), which measures how much a borrower has to pay in principle and interest payments in proportion to his or her yearly income.
Currently, the restriction requires 40 percent of the DSR to about ten percent of all borrowers.
Authorities plan to raise the proportion of borrowers subject to the 40 percent DSR to 20 percent and 30 percent in phases and apply the regulation to all borrowers.