The economic outlook for self-employed people has worsened for three consecutive months since the second half of the year began, while lending rates and delinquency rates among financially vulnerable self-employed borrowers remain high. Data from the Bank of Korea’s Economic Statistics System (한국은행 경제통계시스템) show that the Consumer Sentiment Index for self-employed people’s economic outlook was 87 in July 2026, 83 in August and 82 in September. The delinquency rate among financially vulnerable self-employed borrowers was 12.71% at the end of June, prompting concerns that a weak economy combined with interest-rate pressures could increase the burden on both borrowers and financial institutions.

Background and context

The Consumer Sentiment Index (CSI) measures how survey respondents view the economy going forward compared with the present. The CSI for the economic outlook reflects views about the economy six months ahead, with 100 as the benchmark. The index for self-employed people fell from 87 in July to 82 in September, and in September it was 11 points lower than the index for salaried workers.

Views on household finances also differed. In September 2026, the index for self-employed people’s outlook for their household finances was 91, while the figure for salaried workers was 101. The more pessimistic outlook among self-employed people for both the economy and their household finances suggests that difficulties in domestic demand may be weighing more heavily on them than on salaried workers.

Lending rates have also risen. According to the Bank of Korea, the average interest rate on bank mortgage loans was 4.66% in August 2026, the highest since November 2022, while the rate on general unsecured loans was 6.33%, the highest since January 2024. The report attributed the rise in domestic market interest rates to the Bank of Korea raising its policy rate in both July and August. It also reported that the yield on 10-year U.S. Treasury bonds had risen above 5% as of September 15, 2026.

What this news means

When the economic outlook deteriorates as lending rates rise, self-employed people who are struggling to repay debt with their sales or income may face an even greater repayment burden. Lim Gwang-gyu, director general of the Bank of Korea’s Financial Stability Department, said the delinquency rate among self-employed borrowers is higher than the rate for general household borrowers, and that further increases in lending rates could make a rise in delinquencies more likely. This was a comment about a possibility, however, not a specific forecast of how high the delinquency rate might rise.

Financially vulnerable self-employed borrowers are defined as multiple-debt holders who are in the bottom 30% of the income distribution or have a credit score of 664 or below. Their delinquency rate rose from 4.93% in the second quarter of 2022 to 10.07% in the fourth quarter of 2023, then remained in double digits. At the end of June 2026, it was 12.71%. The report said that 411,000 self-employed borrowers met this definition and had about 119 trillion won in loans.

The effects may extend beyond borrowers. Lim said that, compared with total debt of about 4,000 trillion won, the debt held by financially vulnerable self-employed borrowers was not large enough to be considered a financial-system stability problem. He added, however, that it could affect the asset quality of financial institutions, particularly non-bank institutions. Rather than treating the current figures as evidence of a crisis across the entire financial system, it is therefore important to note that persistent delinquencies among vulnerable borrowers could put pressure on the soundness of some financial institutions.

For example, if a self-employed person has a loan whose interest rate fluctuates and business conditions also worsen, both interest costs and the funds available for repayment could come under pressure. This is a hypothetical example; the report did not provide details about individual borrowers’ loan terms or actual repayment circumstances.

What is confirmed and what remains unknown

Confirmed facts

  • The CSI for self-employed people’s economic outlook fell for three consecutive months: 87 in July 2026, 83 in August and 82 in September.
  • In September, the economic-outlook CSI for self-employed people was 11 points below that for salaried workers. Their household-finance outlook indices were also different, at 91 and 101, respectively.
  • In August 2026, the average interest rate on bank mortgage loans was 4.66%, and the rate on general unsecured loans was 6.33%.
  • The delinquency rate among financially vulnerable self-employed borrowers was 12.71% at the end of June 2026. The report said there were 411,000 such borrowers, with about 119 trillion won in loans.
  • Lim Gwang-gyu said that although the debt of financially vulnerable self-employed borrowers was not large relative to total debt, it could affect the asset quality of non-bank financial institutions.

What remains unknown

  • No specific forecast was provided for how high the delinquency rate among self-employed borrowers might rise.
  • The report did not confirm any measures being pursued by the government or financial institutions to ease the loan burden on self-employed people.
  • No details were provided about individual borrowers’ interest rates, repayment terms, or actual changes in sales or income.

What readers should check

  • Self-employed people with loans should check their interest rates, how those rates are applied and their repayment schedules in their loan agreements or through information provided by their financial institutions.
  • It is worth monitoring whether changes in the Bank of Korea’s lending-rate data and self-employed people’s sentiment indices continue, but it is important not to draw conclusions about one’s own ability to repay based on aggregate indicators alone.
  • To determine whether they meet the definition of a financially vulnerable self-employed borrower, people should check both whether they have multiple debts and whether they meet the income or credit-score criteria. The report did not provide information about available support programs or application procedures, so eligibility for support must be checked separately.