Credit risk was then passed through to the financial system as a whole by way of MBSs and CDOs. For these reasons, when economic conditions weakened, it aggravated the seriousness of the problems of non-performing mortgages with corresponding severe impact on the financial market.
In case of Korea, however, there has been no signs of household debt turning sour so far, although it has increased very rapidly since the early 2000's. The delinquency rates on banks' household loans stood at only 0.6% at year-end 2007. Future policy tasks In many countries, a large proportion of household debt is made up of housing finance loans.