Household Loans, June 2023Jul 12, 2023

The outstanding balance of household loans across all financial sectors went up KRW3.5 trillion in June 2023 (preliminary), rising for the third consecutive month. Compared to the same month last year, household loans fell 1.2 percent.


* Change (in trillion KRW): -3.4 (Dec 2022), -8.1 (Jan 2023), -5.1 (Feb), -5.1 (Mar), +0.2 (Apr), +2.8 (May), +3.5 (Jun)


(By Type)  Home-backed mortgage loans edged up for four months in a row but other types of loans declined at a faster pace in June. Mortgage loans rose KRW6.4 trillion, with a drop of KRW0.6 trillion in the nonbanking sector and an increase of KRW7.0 trillion in the banking sector. Other types of loans fell KRW2.9 trillion as both banks and nonbanks saw drops of KRW1.1 trillion and KRW1.8 trillion, respectively.

(By Sector)  Household loans rose in the banking sector but declined in the nonbanking sector. Banks saw a rise of KRW5.9 trillion of household loans in June, which went up for the third straight month. Home mortgage loans went up KRW7.0 trillion in the banking sector as individual mortgage loans (up KRW3.7 trillion), policy mortgage loans (up KRW2.6 trillion), jeonse loans (up KRW0.1 trillion) and group lending for new apartment subscription (up KRW0.7 trillion) all increased. Other types of loans fell KRW1.1 trillion due to a drop in credit loans (down KRW0.9 trillion).


The growth of mortgage loans in the banking sector seems to be caused by rising supply of special Bogeumjari Loan for non-speculative homebuyers and housing transactions rebounding in certain areas. However, as the volume of housing transactions is yet to bounce back to the level seen in previous years and with a significant number of mortgage borrowers taking out loans to return jeonse deposit money or for living expenses, the current pace of growth in home mortgage loans is not at an alarming level as to cause overheated speculation in the housing market.


Nonbanks saw a drop of KRW2.4 trillion in household loans with a slight increase in the insurance (up KRW0.1 trillion) sector but declines in the mutual finance (down KRW1.8 trillion), savings banks (down KRW0.1 trillion) and specialized credit finance (down KRW0.7 trillion) sectors.


The pace of decline in the nonbanking sector accelerated in June as mutual finance businesses saw a drop in non-mortgage loans (down KRW1.2 trillion) and household loans from specialized credit finance businesses fell from a growth in the previous month (up KRW0.3 trilliondown KRW0.7 trillion).

Financial authorities will closely monitor trends in household loans and work to ensure stable management of growth trends.

* Please refer to the attached file for details.

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