[One Month After the 12·16 Measures] Ultra-Strict Regulations, Major Banks' Mortgage Loan Growth Slows (Comprehensive)

Slowing Growth in Mortgage Loans at 5 Major Commercial Banks
December Last Year Increase Down 0.4%p from Previous Month
"Overall Weakening of Real Estate Consumer Sentiment"

[Asia Economy Reporter Kim Hyo-jin] Following the implementation of the comprehensive real estate measures on December 16, which include a complete ban on mortgage loans for apartments priced over 1.5 billion KRW, the growth rate of mortgage loans at major banks has noticeably slowed down.

As the government continues to sharpen its stance in the war against real estate speculation and with new loan-to-deposit ratio regulations, banks are compelled to manage their loan and deposit balances more strictly, suggesting that the contraction in mortgage loans is likely to deepen going forward.

According to the financial sector on the 15th, the total mortgage loan balance at the five major commercial banks?KB Kookmin, Shinhan, KEB Hana, Woori, and NH Nonghyup?stood at 409.9279 trillion KRW at the end of December last year, marking only a 0.3% increase from the previous month. At the end of November, the balance was 408.8049 trillion KRW, which was a 0.7% increase from the prior month. This indicates a 0.4 percentage point slowdown in mortgage loan growth.

Looking at each bank, KB Kookmin Bank's balance at the end of December was 81.7566 trillion KRW, showing a modest 1.8% increase from the previous month. Shinhan Bank recorded 77.1116 trillion KRW, up 0.5%, which is a 1.0 percentage point decrease compared to the previous month. KEB Hana Bank saw an increase of 1.1% to 83.2492 trillion KRW, the only one among the five banks to register a 0.3 percentage point rise.

Woori Bank and NH Nonghyup Bank experienced declines in their balances. Woori Bank's mortgage loan balance at the end of December was 93.785 trillion KRW, down 1.5% from the previous month. This is a 1.4 percentage point larger decrease compared to the 0.1% drop in October and November. NH Nonghyup Bank decreased by 0.5% in November and further declined by 0.4% to 74.0255 trillion KRW in December.

An official from a commercial bank commented, "While the change in trend is not very pronounced, considering this is the early stage of the measures' implementation, it appears to be meaningful."

Changes in the government's financial policy stance and related measures are expected to tighten mortgage loans further. A representative example is the new loan-to-deposit ratio regulation implemented this year. When calculating the loan-to-deposit ratio, the weight for household loans has been increased by 15 percentage points, while that for corporate loans has been reduced by 15 percentage points, aiming to encourage banks to increase corporate loans instead of household loans.

To comply with this regulation, banks must either reduce household loans or increase deposits. Financial Services Commission Chairman Eun Sung-soo recently reiterated several times the direction of this year's financial policy, stating, "Financial funds are flowing into unproductive sectors such as real estate, increasing economic inefficiency," and expressing the intention to shift the flow of finance from households to corporations, especially focusing on small and venture businesses.

An industry insider said, "The flow of loans is closely related to the overall policy tone and momentum," adding, "Although the proportion of consumers affected by real estate loan regulations may not be overwhelmingly large, the combined impact of macro policy directions and detailed measures seems to be generally dampening consumer sentiment."

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