People in their prime productive years from 30 to 50 are largely responsible for the dramatic surge in household debt to W1,300 trillion, a majority of them on high incomes (US$1=W1,160).
People in their 30s and 40s accounted for around 80 percent of the W74 trillion increase in household debt in 2014 and 2015. And those in the top 20 percent of the income bracket accounted for 51 percent.
The government eased real estate investment regulations in August 2014, while low interest rates made it easy to borrow money. That seems to have prompted many younger people to take out loans to invest in real estate.
The figures have slightly calmed the fears of analysts, who say the household debt situation looks less risky as high-income earners account for the bulk of new borrowings.
But there are still households who take out loans to cover their living expenses, fund their struggling business and pay off other debts. They account for just 4.4 percent of total borrowers but are expected to be hit hard if U.S. interest rates rise further.
The Bank of Korea estimates people falling into this risky category borrowed W78.6 trillion.
Some W78.6 trillion worth of household loans in Korea are at risk of default if interest rates rise next year. That is 6.4 percent of the total household debt as of the end of September (US$1=W1,208).
The Bank of Korea raised the concerns in a report to the National Assembly on Monday.
The at-risk loans were taken out by people who shoulder debts from multiple lenders and people with low credit ratings in the bottom 10 percent of the income bracket.
They are the most vulnerable to bankruptcy should interest rates rise.
Low-credit borrowers took out 74 percent of their loans from small savings banks and loan sharks that charge higher interest than commercial banks.
The BOK warned of a chain reaction whereby further rises in U.S. interest rates could trigger higher rates here and lead to an increased number of defaults that would then threaten the financial health of Korean banks, possibly requiring a government bailout.