Regulatory Alerts2025-01-15 | 83859Household Loans, December 2024
The Financial Services Commission released preliminary data showing that household loans across all financial sectors increased by KRW41.6 trillion in 2024, with mortgage loans driving growth in the banking sector while nonbanking sectors saw slower declines. In December 2024, total household loan balances rose by KRW2.0 trillion, a deceleration from the previous month, as mortgage growth slowed due to seasonal factors and expectations of future rate cuts. Financial authorities plan to maintain self-management principles in 2025 to contain household debt growth within annual economic growth levels, citing stable debt-to-GDP ratios despite recent regulatory tightening.
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Household Loans, December 2024 Jan 15, 2025
Household Loans in 2024
In 2024, the outstanding balance of household loans across all financial sectors went up KRW41.6 trillion (preliminary), growing at a faster rate compared with the end of the previous year (up 2.6 percent) .
- Change (in trillion KRW, y-o-y): +112.3 (2020), +107.5 (2021), -8.8 (2022), +10.1 (2023), +41.6 (2024 P )
(By Type)
Mortgage loans increased at a faster rate compared with the previous year (up KRW45.1 trillion → up KRW57.1) led by the banking sector. Other types of loans fell at a slower rate over the same period (down KRW35.0 trillion → down KRW15.5) .
(By Sector)
Household loans grew at a faster rate in the banking sector compared with the previous year (up KRW37.1 trillion → up KRW46.2 trillion) , while declining at a slower rate in the nonbanking sector (down KRW27.0 trillion → down KRW4.6 trillion) .
Mortgage loan growth from banks stayed at a similar level from a year ago (up KRW51.6 trillion → up KRW52.1 trillion) . Other types of loans from banks continued to decline but at a slower rate compared with the previous year (down KRW14.5 trillion → down KRW5.9 trillion) .
Household loans in the nonbanking sector rose in the specialized credit finance (up KRW3.2 trillion) , savings banks (up KRW1.5 trillion) , and insurance (up KRW0.5 trillion) sectors, but declined in the mutual finance (down KRW9.8 trillion) sector.
Household Loans in December 2024
In December 2024, the outstanding balance of household loans across all financial sectors rose KRW2.0 trillion (preliminary), growing at a slower rate compared with the previous month (up KRW5.0 trillion) .
(By Type)
In December, mortgage loans from banks rose at a slower rate compared with the previous month (up KRW4.0 trillion → up KRW3.4 trillion) . Other types of loans turned back down from the growth a month ago (up KRW1.0 trillion → down KRW1.4 trillion) .
(By Sector)
Household loans shifted back lower in the banking sector from the growth in the previous month (up KRW1.9 trillion → down KRW0.4 trillion) , but increased at a slower rate in the nonbanking sector (up KRW3.2 trillion → up KRW2.3 trillion) .
Mortgage loans from banks rose at a slower rate compared with the previous month (up KRW1.5 trillion → up KRW0.8 trillion) due to the effects of the slow moving season and expectation for further rate cuts in the future. Non-policy-based mortgage loans from banks declined at a faster rate (down KRW0.8 trillion → down KRW1.7 trillion) . Other types of loans including credit loans shifted back lower from the previous month (up KRW0.4 trillion → down KRW1.1 trillion) .
In the nonbanking sector, mortgage loans rose at the same level as the previous month (up KRW2.6 trillion → up KRW2.6 trillion) , while other types loans edged back lower (up KRW0.6 trillion → down KRW0.3 trillion) due to the effects of year-end bonuses and quarter-end write-offs. Mutual finance businesses (up KRW2.2 trillion) , insurance companies (up KRW0.3 trillion) , and savings banks (up KRW0.1 trillion) saw increases, while specialized credit finance businesses saw a decline (down KRW0.3 trillion) in household loans.
Assessment
In 2024, the pace of household loan growth expanded from April as interest rates on loans declined and housing transactions rose in the Seoul metropolitan area. However, the pace of growth started to slow down since September with the implementation of the tightened stress debt service ratio (DSR) rules and the self-regulatory efforts made by financial companies. Overall, household debt growth relative to gross domestic product (GDP) demonstrates a stable level of management.
- Household debt to GDP (%): 98.7 (2021), 97.3 (2022), 93.6 (2023), 90.8 (Q3 2024)
In 2025, financial authorities will continue to encourage financial companies to maintain the current self-management stance and consistently work to contain the pace of household debt growth within the level of annual economic growth based on the principle of borrowing and lending according to one’s own repayment capabilities.
- Please refer to the attached PDF for details.
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