Household Loans, July 2024

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Household Loans, July 2024
Aug 12, 2024

In July 2024, the outstanding balance of household loans across all financial sectors rose KRW5.3 trillion (preliminary), growing at a faster rate compared with the previous month (up KRW4.2 trillion) .

• Change (in trillion KRW, m-o-m): -1.9 (Feb 2024), -4.9 (Mar), +4.1 (Apr), +5.3 (May), +4.2 (Jun), +5.3 (Jul)
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(By Type)

Home-backed mortgage loans rose KRW5.4 trillion, growing at a slower rate compared with the previous month (up KRW6.0 trillion) , as banks saw a smaller increase in mortgage loans (up KRW6.2 trillion → up KRW5.6 trillion) .

Other types of loans fell KRW0.2 trillion with declines seen in both the banking (down KRW0.3 trillion → down KRW0.1 trillion) and nonbanking (down KRW1.5 trillion → down KRW0.1 trillion) sectors. However, the pace of the decline decelerated compared with the previous month (down KRW1.8 trillion) .

(By Sector)

Household loans expanded at a slower rate in the banking sector and declined at a slower rate in the nonbanking sector. In July, banks saw an increase of KRW5.5 trillion in household loans, a drop from KRW5.9 trillion in the previous month. The decline was led by the slowdown in mortgage loans (up KRW6.2 trillion → up KRW5.6 trillion) as group lending for new apartment subscription fell KRW2.0 trillion from a rise of KRW0.1 trillion a month ago. Other types of loans declined at a slower rate compared with the previous month (down KRW0.3 trillion → down KRW0.1 trillion) .

In the nonbanking sector, household loans declined at a significantly slower rate compared with a month ago (down KRW1.7 trillion → down KRW0.2 trillion) , due mainly to a base effect from the previous month. Mutual finance businesses (down KRW1.2 trillion) and insurance companies (down KRW0.02 trillion) continued to see declines, while specialized credit finance companies (up KRW0.8 trillion) and savings banks (up KRW0.2 trillion) saw increases.

(Assessment)

Household loans have been on an upward trajectory since April this year led by policy loans and mortgage loans from the banking sector. With the recent growth of housing transactions in the Seoul metropolitan area and potential rise in borrowing demand during summer vacation seasons, financial authorities will continue to stay alert as there are concerns about an expanded pace of growth. While continuing to closely monitor situations in household debt growth, authorities will closely work with related ministries and financial sectors to effectively manage the pace of household loan growth within the level of nominal GDP growth.

As the second phase stressed debt service ratio (DSR) rule is scheduled to take effect from September 1, financial sectors are advised to strictly adhere to the practice of lending (and borrowing) according to one’s own repayment capabilities and promote the practice of repaying debt in installments from the beginning.

• Please refer to the attached PDF for details.

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