Household Loans, November 2024

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Household Loans, November 2024 Dec 11, 2024

In November 2024, the outstanding balance of household loans across all financial sectors rose KRW5.1 trillion (preliminary), growing at a slower pace compared with the previous month (up KRW6.5 trillion) .

(By Type)

Home-backed mortgage loans grew KRW4.1 trillion across all financial sectors, rising at a slower pace compared with the previous month (up KRW5.5 trillion) . Mortgage loans in the banking sector continued to grow at a slow pace (up KRW3.6 trillion → up KRW1.5 trillion) .

Other types of loans increased KRW1.1 trillion overall, keeping the same level of growth from a month ago. Banks saw a small increase in unsecured loans (up KRW0.3 trillion → up KRW0.4 trillion) , while nonbanks saw a slight decline (up KRW0.8 trillion → up KRW0.6 trillion) .

(By Sector)

The pace of household loan growth slowed down in the banking sector while expanding in the nonbanking sector month-on-month.

In November, banks saw an increase of KRW1.9 trillion in household loans, a drop from the increase of KRW3.8 trillion a month ago. The growth of policy-based loans expanded (up KRW2.0 trillion → up KRW2.3 trillion) due to continuing demand for government-backed mortgage loans, but the issuance of banks’ own mortgage loans shifted down (up KRW1.5 trillion → down KRW0.8 trillion) . Other types of loans including credit loans in the banking sector rose at a slightly faster pace (up KRW0.3 trillion → up KRW0.4 trillion) compared with the previous month.

Nonbanks saw an increase of KRW3.2 trillion in household loans, growing at a faster pace from the previous month (up KRW2.7 trillion) . Mortgage loans from nonbanks expanded at a faster pace (up KRW1.9 trillion → up KRW2.6 trillion) , but the pace of grow decelerated for other types of loans (up KRW0.8 trillion → up KRW0.6 trillion) . Mutual finance businesses (up KRW1.6 trillion) , insurance companies (up KRW0.6 trillion) , specialized credit finance businesses (up KRW0.6 trillion) , and savings banks (up KRW0.4 trillion) all saw increases in household loans.

(Assessment)

The FSC held a meeting with related authorities, industry groups, and financial companies on December 11 to discuss recent trends of household debt growth and response measures going forward. At the meeting, authorities identified the banking sector’s tightened household loan management stance since August this year and the recent slowdown in housing transactions as the main factors behind the decelerating pace of household loans. However, as there may be further interest rate cuts in the future, authorities shared a common view on the need to maintain close monitoring over household debt trends for the time being. In particular, authorities agreed to continue to closely monitor household loan trends in the nonbanking sector that has shown an accelerated pace of growth recently. In this regard, instead of increasing the supply of housing loans, authorities underscored the need for the nonbanking sector to turn their focus on the resolution of non-performing debt, bolstering loss absorbing capacity, and increasing the supply of mid-range interest rate loans to financially vulnerable groups.

Meanwhile, as there are concerns about a prolonging of the situation where jeonse tenants face difficulties in getting back their rent deposits due to high jeonse prices outside the Seoul metropolitan area and for non-apartment housing units, authorities decided to extend the operation of the temporarily eased housing loan rules—which enable landlords to use bank loans to return rent deposits to tenants—for one year until December 31, 2025.

• Please refer to the attached PDF for details.

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