Household Loans, October 2023Nov 08, 2023

The outstanding balance of household loans across all financial sectors increased KRW6.3 trillion in October 2023 (preliminary), rising at a faster rate compared to the previous month.


* Change (%, y-o-y): +0.1 (Apr 2023), +2.6 (May), +3.2 (Jun), +5.2 (Jul), +6.1 (Aug), +2.4 (Sep), +6.3 (Oct)


(By Type)  Mortgage loans grew at a somewhat slower rate while other types of loans expanded at a faster pace. Home-backed mortgage loans rose KRW5.2 trillion as nonbanks saw a drop of KRW0.6 trillion and the pace of growth in the banking sector also declined from KRW6.1 trillion a month ago to KRW5.8 trillion. Other types of loans rose KRW1.1 trillion with a low base effect from the previous month (down KRW3.3 trillion).


(By Sector)  Household loans expanded more rapidly in the banking sector while the pace of decline in the nonbanking sector slowed from a month ago. Banks saw an increase of KRW6.8 trillion of household loans in October, going up from KRW4.8 trillion a month ago. Mortgage loans went up KRW5.8 trillion in the banking sector, mainly led by policy mortgage loans. Other types of loans rose KRW1.0 trillion in the banking sector with credit loans edging up KRW1.2 trillion from a drop of KRW1.3 trillion in the previous month due to seasonal factors such as moving season and demand for IPO subscription.


In the nonbanking sector, household loans dropped KRW0.5 trillion overall, showing a slowing pace of decline from the previous month (down KRW2.5 trillion). Specialized credit finance businesses (up KRW0.7 trillion), insurance companies (up KRW0.4 trillion) and savings banks (up KRW0.1 trillion) saw household loans going up, while mutual finance businesses continued to see a decline (down KRW1.7 trillion).


Although the accelerated pace of household loan growth in October appears to be caused by a low base effect from a month ago, the financial authorities will continue to closely monitor trends and ensure close management of the growth level. Meanwhile, the authorities plan to strengthen borrowing requirements by announcing the introduction of a stressed debt service ratio (DSR) limit on variable interest rate loans.


* Please refer to the attached file for details.

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