S.Korean households spend quarter of income on repaying debts

South Korea households spent a quarter of their annual income on paying back debts, putting more pressure on the already-lackluster private consumption, a government report showed Monday.

The debt-servicing ratio, which gauges the percentage of principal and interest payments to disposable income to measure the extent of danger for household debts, increased from 21.7 percent in 2014 to 24.2 percent this year, according to a joint survey by Statistics Korea, the Bank of Korea and the Financial Supervisory Service.

The finance ministry attributed the higher debt-servicing ratio to an improved quality of debts caused by a rise in practices of repaying both principal and interest, but 70 percent of respondents said that their debt repayment is burdensome.

Higher debt-servicing ratio could put more pressures on households already refraining from spending money in a bid to prepare for after-retirement life amid the fast aging of population and lack of social security benefits.

Respondents who said it would be impossible to repay debts increased from 6.9 percent of the total last year to 7.1 percent this year.

As of end-March, total debts averaged 61.81 million won (52,470 U.S. dollars) per household, up 2.1 percent from a year earlier.

Those in their 60s posted the highest debt growth of 8.6 percent among all age groups, rising from 44.06 million won in 2014 to 47.85 million won in 2015, indicating the elderly depending on debts for a living due to shortage in social security nets.

The country's poverty line, or half the mean income of the total population, was 11.56 million won in 2014.

The poverty ratio, or the percentage of people earning less than the poverty line a year, was 16.3 percent in 2014, meaning that one out of six South Koreans make a living with less than 11. 56 million won of disposable income.

The poverty ratio for those aged 65 or above reached 48.4 percent in 2014, more than quadrupling 12.0 percent for those aged 18-64.