The majority of Koreans who took out “jeonse” loans for apartment deposits are middle class and under age 50, according to data from the Bank of Korea on Monday.

The data showed that homeowners borrowed more than 60.1 trillion won ($56.3 billion) for jeonse payments in the first half of this year, double that of 2009.

About 73 percent of such loans, or 44.1 trillion won, were taken out by those aged below 50 in the mid-income group, the BOK data noted.

Jeonse loans to the top 20 percent accounted for 17 percent, while the second 20 percent bracket accounted for 37 percent of the total borrowing. Loans to the mid-income bracket accounted for 28 percent, with the rest taken by the bottom 40 percent.

Analysts warned that high household debt, in part due to rising mortgages on the back of high apartment prices, poses a downside risk to Asia’s fourth-largest economy.

“This unique (jeonse) system flatters Korea’s household debt compared to other markets, but given that the deposit is eventually returned and poses far lower risk,” HSBC Global Research said in a report.

“Still, the continued rise in household debt has posed challenges to officials. In addition, irrespective of the risk associated with the composition of consumer debt, its size renders household spending sensitive to changes in interest rates,” it added.

A slowdown in Korea’s housing market has made apartment owners reluctant to put their assets on the market for sale. Instead, they were raising jeonse deposit prices or switching to a monthly rental system.

However, analysts said that Korea’s apartment market seemed to be reviving, reflecting an economic recovery backed by exports and stimulus measures.

“The decline in house prices appears to have bottomed out, with national home prices rising the most in two years in October,” said Barclays in a report.

By Park Hyong-ki (hkp@heraldcorp.com)