Despite Moon Administration's Real Estate Regulations... Bank Household Loans Increase by 60 Trillion Won Annually

December Bank Mortgage Loans Increase by 5.6 Trillion Won... Largest Growth in Over 3 Years

[Asia Economy Reporter Kim Eun-byeol] As real estate prices soar, the increase in household loans continues to the extent that the government's real estate regulations have become ineffective. In December, bank mortgage loans increased at the fastest rate in over three years. Despite a series of real estate measures introduced during the Moon Jae-in administration, the scale of household loans in the banking sector, including mortgage and credit loans, has increased by 60 trillion won annually.

According to the "Financial Market Trends in December" released by the Bank of Korea on the 10th, bank mortgage loans increased by 5.6 trillion won last month. This increase was about 700 billion won higher than the 4.9 trillion won increase in November. The rise in demand for funds was influenced by active transactions in both jeonse (long-term lease) and sales of houses. The monthly increase in mortgage loans recorded the largest growth since November 2016, when it reached 6.1 trillion won.

As the scale of mortgage loans continues to grow, the increase in household loans in banks has also expanded. Following a 58.9 trillion won increase in 2017, bank household loans rose by 60.8 trillion won in 2018 and 60.7 trillion won last year. Despite the government's continuous real estate measures, annual bank household loans have not declined and have increased by around 60 trillion won each year. The Moon administration introduced measures such as the August 2, 2017 plan, the September 13, 2018 plan, and the comprehensive December 16 plan last year.

A Bank of Korea official explained, "The demand for jeonse funds continued, and apartment transaction prices also rose, resulting in a significant increase in household loans in December."

Other loans, including credit loans and overdrafts, increased by 1.6 trillion won in December. This appears to be due to housing fund demand affecting credit loans as well. Previously, other loans amounted to 2.1 trillion won in November. A Bank of Korea official said, "Although other loans decreased slightly compared to November, the amount was not small when compared to the usual December trend."

He added, "The flow of loans will change depending on how effective the real estate measures are. These loan regulations have a time lag, such as about two months from the date of ownership transfer. During the September 13 measures, loans decreased two to three months later."

Meanwhile, bank corporate loans turned to a decline in December, decreasing by 6.2 trillion won. Large corporate loans shifted from an 800 billion won increase in the previous month to a 2.2 trillion won decrease, and small and medium-sized enterprise loans, which had increased by 5.1 trillion won in November, also decreased by 3.9 trillion won. This was due to companies temporarily repaying loans or banks writing off non-performing loans to manage financial ratios at the end of the year.

In December, bank deposits decreased by 200 billion won, and asset management company deposits also turned to a decline. Deposits at asset management companies decreased by 8.1 trillion won in December.

This content was produced with the assistance of AI translation services.