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By Park Hyong-ki
The local households' debt in proportion to the country's economic output is reaching nearly 100 percent, according to the National Assembly's finance committee.
The ratio stood at 95.6 percent last year, up 4.6 percent from 2015, the committee said, citing data from the Bank of Korea (BOK) and the Organization for Economic Cooperation and Development (OECD).
It is higher than the United States' 81 percent, and Japan's 80 percent.
In a parliamentary audit of local fiscal and monetary authorities, lawmakers have called for effective measures on household debt as it is negatively affecting private spending and investment.
They have criticized former government's debt-led growth policy via housing deregulations that encouraged the middle and low classes to borrow more to buy apartments. This resulted in an abnormal development of the real estate market.
With heavy debt, the households' debt in proportion to their disposable income also increased to nearly 180 percent last year, from 163 percent in 2014. This ratio is higher than the United States' 116 percent and Japan's 128 percent.
Kim Doo-kwan, a lawmaker of the Democratic Party of Korea, raised concerns over the effect of a possible interest rate hike in the future on the low-income earners with mortgages.
"Their burden will increase further as Korea follows the U.S. rate hike, and this would increase the number of people who cannot meet their debt obligations," Kim said.
