Household Loans Jump 7.6 Trillion Won in December... Due to Expansion in Mortgage Loan Growth

[Asia Economy Reporter Jo Gang-wook] Household loans increased by 7.6 trillion KRW last month. This is attributed to a slight expansion in the increase of mortgage loans.

According to the 'December 2019 Household Loan Trends (Provisional)' announced on the 10th by the Financial Services Commission and the Financial Supervisory Service, household loans across all financial sectors increased by 7.6 trillion KRW in December last year, expanding by 1 trillion KRW compared to the same month of the previous year (6.6 trillion KRW). In particular, loans from banks increased by 7.2 trillion KRW, which is 1.8 trillion KRW more than the same period last year. This is interpreted as a result of the faster pace of mortgage loan growth.

Mortgage loans across all financial sectors increased by 4.6 trillion KRW last month, up 300 billion KRW from 4.3 trillion KRW in the same month of the previous year, and 800 billion KRW more than the previous month (3.8 trillion KRW). Especially, bank mortgage loans increased by a total of 5.6 trillion KRW last month, expanding by 700 billion KRW compared to 4.9 trillion KRW in the same month last year. On the other hand, mortgage loans from the secondary financial sector decreased by 400 billion KRW compared to the same month last year due to conversions through the Saemin-type Anshim Conversion Loan and risk management efforts.

Other loans such as credit loans also expanded. They increased by a total of 3 trillion KRW last month, 700 billion KRW more than 2.3 trillion KRW in the same month last year. Among these, other loans from banks increased by 1.6 trillion KRW, which is attributed to the lowered credit loan interest rates falling to the high 3% range.

A financial authority official explained, "The reason for the expanded increase in bank household loans in December last year is due to the conversion effect through the Saemin-type Anshim Conversion Loan, the increase in demand for jeonse loans which slightly expanded the scale of mortgage loan increases, and the increase in other loans due to credit loan growth influenced by low interest rates."

The total household loan amount across all financial sectors increased by 56 trillion KRW last year. However, the increase was 19.2 trillion KRW less than the 75.2 trillion KRW increase in the previous year. The growth rate also slowed from 5.9% to 4.1%, showing a slowdown in the household loan growth trend.

The increase in household loans was over 100 trillion KRW annually, with 109.6 trillion KRW in 2015 and 123.2 trillion KRW in 2016, but after the financial authorities began total volume management in 2017, the increase narrowed to 90.5 trillion KRW in 2017 and 75.2 trillion KRW in 2018. The financial authorities explained that a stable growth trend has been maintained at the lowest level in the past five years.

A financial authority official said, "The reason for the expanded increase in bank household loans in December last year compared to the same month last year is the conversion effect through the Saemin-type Anshim Conversion Loan and the influence of increased demand for jeonse loans." He added, "Other loans also expanded due to the increase in credit loans influenced by low interest rates."

In fact, the amount converted from the secondary financial sector to bank Anshim Conversion Loans reached 900 billion KRW. Bank Bogeumjari Loans increased significantly by 2.2 trillion KRW, compared to 700 billion KRW in the same period last year. Additionally, bank jeonse deposit loans expanded to 2.5 trillion KRW in December last year, up from 2 trillion KRW in the same period the previous year.

A financial authority official stated, "We will steadily implement the recently announced 12.16 measures and manage household debt stably, while also guiding funds to flow into productive sectors such as innovative companies rather than household loans."

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