Data released by the Bank of Korea on Wednesday showed that household loans extended by South Korean banks fell for the third month in a row in February, influenced by tighter lending regulations. However, mortgage lending experienced a slight rebound due to seasonal demand.
According to the central bank's figures, the outstanding balance of household loans stood at 1,172.3 trillion won (approximately $799.11 billion) by the end of February, a decrease of 300 billion won from the previous month.
Household lending has been on a downward trend since December of last year. This is largely attributed to the government’s efforts to tighten loan and property purchase policies in response to soaring housing prices in Seoul and surrounding areas.
South Korean President Lee Jae-myung recently reaffirmed his firm commitment to stabilizing the real estate market and issued a stern verbal warning to multi-property owners.
Nevertheless, mortgage-backed loans increased by 400 billion won in February compared to the previous month, reaching 934.9 trillion won, reversing the decline seen in the prior month. This marks the first month-on-month growth since November of last year.
In contrast, unsecured and other types of household loans fell by 700 billion won month-on-month in February, following a drop of 400 billion won in January.
Park Min-cheol, Deputy Director of the Bank of Korea’s Market Operations Department, stated during a press briefing, “The rise in mortgage loans was driven by increased housing transactions and early demand ahead of the new school semester.”
He added, “Other types of loans continued to decline due to the distribution of holiday allowances and performance bonuses, but the decrease was moderate and consistent with growing stock investment demand.”
On the other hand, corporate loans increased by 9.6 trillion won in February from the previous month, after rising by 5.7 trillion won in January. Data showed that the total outstanding corporate loans reached 1,379.2 trillion won by the end of February.
Meanwhile, separate data released by the Financial Supervisory Service (FSS) indicated that loans provided to households by all financial institutions, including savings banks and insurance companies, grew by 2.9 trillion won in February, following a 1.4 trillion won increase in the previous month.
The FSS reported that mortgage loans rose by 4.2 trillion won last month, a faster pace compared to the 3 trillion won increase recorded in January.