Seoul: Loans held by elderly self-employed individuals have been rising at a faster pace than those of other age groups, driven largely by real estate sector borrowing, a central bank report showed Tuesday, suggesting possible risks to overall financial stability in case of a major incident in the property market.

According to Yonhap News Agency, the total loans held by self-employed business owners aged 60 and older stood at 389.6 trillion won (US$262.6 billion) as of end-September. This marks an increase of 124.3 trillion won from the end of 2021, accounting for a substantial portion of the 163 trillion-won rise in total loans to all self-employed individuals during the same period.

The report noted that real estate loans accounted for 38.1 percent of total loans to elderly self-employed borrowers, a proportion significantly higher than those of other age groups. By contrast, borrowers in their 30s or younger had a larger share of loans in retail, lodging and food services, which are more sensitive to economic fluctuations.

Across all age groups, bank loans accounted for roughly 60 percent of total borrowing, the Bank of Korea (BOK) said. Non-bank financial institutions, such as mutual finance companies and savings banks, held a higher share of loans among older borrowers.

Loan delinquency rates were highest among borrowers in their 40s, at 2.02 percent, while the rate for those aged 60 and above was at 1.63 percent, slightly below the overall average of 1.76 percent, it said. The BOK cautioned that elderly self-employed borrowers are relatively vulnerable to changes in the real estate market.

The report added that a high proportion of loans to vulnerable borrowers could pose risks to the soundness of mutual finance and savings banks if shocks occur.