If you spend about a quarter of your income

<Which is more important, interest rate or exchange rate?>

If you spend about a quarter of your income paying off your debt, your daily life will hardly improve. Rather than getting better, it becomes more difficult.

This is the situation facing households in Korea, Canada, Sweden, and Australia. Among OECD countries, the debt-to-income ratio (DSR) is in the 20-24% range.

The four countries with high DSRs also suffered the biggest correction in the real estate market since the pandemic.

We measured how far DSR deviates from the 20-year average, and among the four countries, Korea has the highest figure.

Underlying the growing number of households in marginal situations and the lack of domestic demand despite strong exports, the weight of debt is far higher than the historical average.

The sudden increase in DSR is absolutely due to the rise in the base rate. If you draw a graph with the trend of the COFIX rate and the DSR trend, which are heavily influenced by the Bank of Korea's base rate, they look almost the same.

The longer the debt repayment burden at this critical level continues, the deeper the concerns for households and the economy.

Households, who are busy paying off interest, are in a state of extreme poverty as they wait for the Bank of Korea to cut interest rates, but if they lower interest rates, the exchange rate is unstable again.