The arrears on real estate project financing (PF) joint loans of regional agricultural cooperatives across the country have increased by approximately 1 trillion won over the past year. The overall delinquency rate has also reached 13.62%, surpassing the risk threshold.
According to data submitted by Im Mi-ae, a member of the Democratic Party, on the 10th, the amount of arrears for joint loans of regional agricultural cooperatives at the end of December last year was 3.1646 trillion won. This is an increase of 1.0318 trillion won compared to the end of January of the same year (2.1328 trillion won).
The delinquency rate increased by 4.24 percentage points from 9.38% at the end of January last year to 13.62% at the end of December. Compared to the delinquency rate of member mutual financing loans in December last year (4.03%), the joint loan delinquency rate is three times higher. In mutual financing, if the delinquency rate exceeds 10%, institutions are classified as having a significant risk of insolvency.
By region, the delinquency rate for agricultural cooperatives in the Daegu area recorded the highest at 24.09%. The amount in arrears reached 135.1 billion won. The Gyeongbuk area followed with 18.52%. Both regions have experienced severe real estate stagnation due to a significant increase in unsold apartments last year.
Following that, the delinquency rates were high in Chungbuk at 17.24%, Jeju at 15.56%, Gyeonggi at 15.11%, Chungnam at 14.62%, Daejeon at 14.60%, and Gwangju at 14.32%. The only areas with a delinquency rate below 10% were Seoul (6.27%) and Incheon (9.15%). The region with the highest amount in arrears was Gyeonggi, with 751.6 billion won in arrears.
Joint loans are administered through a method where several regional agricultural cooperatives come together to handle real estate PF bridge loans (land acquisition stage PF). Regional agricultural cooperatives do not have large asset sizes, which prevents them from providing hundreds of billions of won loans, such as bridge loans, independently. Therefore, several agricultural cooperatives have chosen to collaboratively handle bridge loans, but significant insolvencies have occurred due to the worsening real estate market.
Daegu-Gyeongbuk and Daejeon-Chungcheong areas are regions where the surge in problematic unsold properties (unsold after completion) is alarming. In January, the number of problematic unsold units in Chungbuk increased by 43.4% (403 units) compared to the previous month. During the same period, Chungnam saw an increase of 1,135 units (6.0%) and Daejeon 582 units (5.2%). Daegu-Gyeongbuk accounted for as much as 60% of newly problematic unsold units last December, highlighting the ongoing real estate recession.
As the regional real estate market recession shows signs of prolongation, the insolvency of joint loans from agricultural cooperatives is expected to increase further. Im Mi-ae noted, "As real estate market stagnation has made development difficult, the insolvency of projects that could not enter the PF stage has caused bridge loan defaults to also enter a stage of insolvency," calling attention to concerns that local cooperative insolvency issues could lead to member losses.