Regulatory Alerts2025-02-12 | 83994Household Loans, January 2025
The Financial Services Commission reported that total household loans declined by KRW0.9 trillion in January 2025, marking the first drop in ten months due to seasonal factors and economic uncertainties. While home mortgage loans increased by KRW3.3 trillion driven by faster growth in the banking sector, other loan types fell by KRW4.2 trillion with significant declines in nonbanking sectors. Authorities remain vigilant regarding steady policy loan growth and potential February increases linked to the new school year, while also monitoring regional housing supply outside the Seoul metropolitan area.
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Household Loans, January 2025 Feb 12, 2025
In January 2025, the outstanding balance of household loans across all financial sectors declined KRW0.9 trillion (preliminary), turning back down from the growth of KRW2.0 trillion in the previous month.
(By Type)
Home mortgage loans increased KRW3.3 trillion, growing at a slightly slower rate from the previous month (up KRW3.4 trillion) . Mortgage loans expanded at a faster rate in the banking sector (up KRW0.8 trillion → up KRW1.7 trillion) but at a slower rate in the nonbanking sector (up KRW2.6 trillion → up KRW1.6 trillion) .
Other types of loans fell KRW4.2 trillion, declining at a faster rate compared with the previous month (down KRW1.4 trillion) , as the pace of decline expanded significantly in the nonbanking sector (down KRW0.3 trillion → down KRW2.0 trillion) .
(By Sector)
Household loans in the banking sector saw a similar level of decline from the previous month but shifted back down in the nonbanking sector.
In January 2025, banks saw a drop of KRW0.4 trillion in household loans, showing a similar level of growth from a month ago (down KRW0.4 trillion) . Government-backed policy loans increased at a slower rate (up KRW2.5 trillion → up KRW2.3 trillion) , while banks’ own mortgage loans declined at a slower rate (down KRW1.7 trillion → down KRW0.6 trillion) . Other types of loans including credit loans dropped at a faster rate compared with the previous month (down KRW1.1 trillion → down KRW2.1 trillion) .
In the nonbanking sector, household loans fell KRW0.5 trillion, shifting back down from the growth of KRW2.4 trillion a month ago. Mutual finance businesses (up KRW2.2 trillion → down KRW0.2 trillion) and insurance companies (up KRW0.3 trillion → down KRW0.5 trillion) saw household loans edging down from increases in the previous month. Specialized credit finance businesses experienced a slower pace of decline (down KRW0.3 trillion → down KRW0.01 trillion) and savings banks saw a faster rate of growth (up KRW0.1 trillion → up KRW0.2 trillion) .
(Assessment)
The outstanding balance of household loans across all financial sectors edged down for the first time in ten months since March last year due to growing uncertainties at home and abroad and the seasonal factors, such as holiday bonuses and slow housing market transactions in the winter season. However, since mortgage loans from banks rose at a faster rate compared with the previous month and policy loans continued to grow steadily, it is necessary to continue to remain vigilant. As it is possible that household loans can turn back up in February due to increasing demand for housing transactions ahead of the start of the new school year, it is necessary to continue to closely monitor housing market and interest rate situations to ensure stable management on household debt growth. In addition, since there are growing numbers of unsold housing units from newly built apartment projects outside the Seoul metropolitan area recently, financial authorities will closely look into the situation of supply of funds to the regions outside the Seoul metropolitan area.
- Please refer to the attached PDF for details.
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