Growth of Household Loans Slows for Second Straight Month, but Mortgage Loans Rebound

The growth of household loans in the banking sector slowed for the second consecutive month last month, hitting the smallest increase in four months.

However, mortgage loans saw their growth expand again, driven by the housing market in the Seoul metropolitan area, making it premature to conclude that household lending has entered a stabilization phase.

According to the financial market trends released by the Bank of Korea (BOK) today (the 9th) and household loan trends announced by the Financial Services Commission and the Financial Supervisory Service, the balance of household loans (including policy mortgages) at deposit-taking banks stood at 1,198.3 trillion won as of the end of August, marking an increase of 3.4 trillion won from the end of July.

This is the smallest increase since April (+2.1 trillion won).

The monthly increase in household loans expanded steeply in May (+6.9 trillion won) and June (+7.6 trillion won) before showing a downward trend again in July (+5.5 trillion won) and August.

Categorized by loan type, the balance of mortgage loans reached 952.5 trillion won at the end of August, up 4 trillion won from the end of July.

Although the overall growth of household loans slowed, mortgage loans actually saw a larger increase than in July (+3.5 trillion won).

The growth expanded for both bank-inhouse mortgages (+2.5 trillion won to +2.9 trillion won) and policy loans (+1 trillion won to +1.1 trillion won).

Other loans, which include credit loans, decreased by 600 billion won to 244.9 trillion won.

In the previous month, they had increased by 2 trillion won, turning to a decrease for the first time in four months since last April (-600 billion won).

Lee Seung-yeop, deputy director of the Market Operations Team at the BOK, analyzed, "The balance of mortgage loans increased due to a rise in housing transactions in the metropolitan area in May and an increase in balance payments stemming from a rise in apartment move-in volumes between July and August." He added, "While the growth of bank household loans has slowed, mortgage loans continue to show a relatively solid upward trend, and we still need to keep an eye on the impact of the government's real estate measures in August."

Regarding other loans, Lee explained, "The balance turned to a decrease due to a slowdown in individual stock investments and tightened management of credit loans by the banking sector."

Household loans across the entire financial sector grew by 2.6 trillion won in August, showing a smaller increase than the previous month (+6.4 trillion won).

However, mortgage loans increased by 4.3 trillion won, expanding their growth compared to the previous month (+3.6 trillion won).
 
Among them, the secondary financial sector (+100 billion won to +300 billion won) also saw an expanded increase.

Other loans decreased by 1.7 trillion won.

Other loans had recorded an increase of 2.8 trillion won in the previous month.

This was largely influenced by credit loans shifting to a decrease (+2.1 trillion won to -500 billion won).

Household loans in the secondary financial sector decreased by 800 billion won, shifting to a downward trend compared to the previous month (+900 billion won).

The credit union sector (-600 billion won to -500 billion won) saw a smaller decrease, while savings banks (+500 billion won to +300 billion won) saw a smaller increase.

Insurance companies (+700 billion won to -300 billion won) and specialized credit finance companies (+300 billion won to -300 billion won) both turned to decreases.

The balance of corporate loans at deposit-taking banks stood at 1,430.8 trillion won at the end of August, up 9.7 trillion won from the end of July.

Large corporate loans grew by 4.9 trillion won as major banks stepped up their lending operations and corporate demand for funds to repay corporate bonds overlapped.

SME loans also increased by 4.8 trillion won, driven by financial support for small and medium-sized enterprises from some banks.

Bank deposits shifted from a decrease of 30 trillion won in July to an increase of 100 billion won in August.

In particular, time deposits grew by 20.3 trillion won, maintaining an upward trajectory following the previous month (+42.3 trillion won).

The inflow of household funds and temporary deposits of local government funds influenced this trend.

Demand-deposit accounts decreased by 14 trillion won due to corporate fund withdrawals for corporate tax payments.

Deposits at asset management companies also shifted from a decrease of 42.8 trillion won in July to an increase of 23.5 trillion won in August.

The major driver was equity-type funds shifting from a decrease of 56.2 trillion won to an increase of 15.5 trillion won, influenced by the stock market rebound.

Money Market Funds (MMFs) increased by 5.6 trillion won.

Lee stated, "Funds are still flowing into equity-type funds," adding, "I think it is still premature to judge that funds are returning from the stock market to time deposits."

(Photo: Provided by BOK, Yonhap News)
※ Please note: This article was translated by AI and may contain errors.