A signboard directs customers to the sections for personal and small business loans at a commercial bank in Seoul, Jan. 8. Yonhap

Koreans in their 20s and 30s find it increasingly tough to take out loans, in stark contrast to the pandemic era when they were a major presence in the loan market.

Analysts said Sunday that younger Koreans are being pushed out from the loan market because many of them can't afford to pay interest, with rates having gone far higher than near zero during the pandemic.

The benchmark interest rate currently stands at 3 percent, after going up as high as 3.5 percent.

Analysts also said younger Koreans who have lower income and lower credit ratings than their seniors are denied from borrowing money due to tighter lending regulations in the post-pandemic era.

According to data compiled by NICE Information Service and released by Rep. Oh Gi-hyoung of the Democratic Party of Korea (DPK), a total of 492.79 trillion won ($341.34 billion) was taken out as loans from borrowers who were aged 39 or younger in 2024.

The amount marked a steady decrease from 2021 when it peaked at 507.36 trillion won, then fell to 496.49 trillion won in 2022 and 496.25 trillion won in 2023.

"The amount of decrease from 2021 to 2024 is nearly 15 trillion won," NICE was quoted as saying by the DPK lawmaker.

The company then noted the amount borrowed by those aged 50 or older increased from 818.23 trillion won in 2022 to 840.21 trillion won in 2024.

Shin Se-don, a professor emeritus of economics at Sookmyung Women's University, assessed younger Koreans "are burdened by increased repayment amounts over a higher key interest rate."

The professor explained that those in their 20s and 30s led a buying spree of homes during the pandemic era when the base rate was as low as 0.5 percent. The Bank of Korea adopted that rate in a bid to boost spending amid the pandemic-stricken economy.

Jung Ho-chul of Citizens' Coalition for Economic Justice (CCEJ), a civic activist group, attributed the tougher lending rules as a reason for the decrease in the amount of money borrowed by younger Koreans.

The financial regulators introduced the rules in 2023 to curb snowballing household debts.

For instance, the so-called "stress interest" was introduced to reflect potential future interest rate hikes when the borrower executes the loan.

The stress interest is based on the gap between the highest household loan rate in the last five years and the current benchmark rate.

Under the system, borrowers experience a 2 to 4 percent reduction in lending limits based on loan types.

"The system is pressing on younger borrowers harder than older age groups due to their lower income and other financial reasons," the CCEJ activist said.