January Household Loan Increase, Largest Since 2004... Real Estate Measures Effect Yet to Show

Bank of Korea 'Financial Market Trends in January 2020'

[Asia Economy Reporter Eunbyeol Kim] Household loans from banks increased by approximately 3.7 trillion KRW in January, marking the largest January increase since 2004. Despite the government's announcement of the December 16 Real Estate Measures, the effects have yet to be seen.

According to the Bank of Korea's "Financial Market Trends in January 2020" released on the 11th, the outstanding balance of household loans at banks reached 892 trillion KRW at the end of January, an increase of 3.7 trillion KRW compared to the previous month. Although this increase is significantly lower than the 7.2 trillion KRW rise in December 2019, the decrease is due to seasonal factors. When comparing January increases alone, this is the largest scale since 2004.

Excluding 1.4 trillion KRW from non-bank refinancing under the Safe Conversion Loan program, the increase in bank household loans in January was 2.3 trillion KRW, the largest since January 2018 (2.7 trillion KRW).

The rise in bank household loans is driven by mortgage loans. Mortgage loans continued to increase due to demand related to housing transactions and the execution of Safe Conversion Loans. The increase in mortgage loans in January was 4.3 trillion KRW, which is also the largest increase since January 2004.

Yoon Okja, head of the Market General Team at the Bank of Korea's Financial Market Department, stated, "Although the December 16 measures were implemented, housing contract numbers had already been increasing until November," adding, "It is expected to take about two months for real estate regulations to be reflected in the market."

According to the Seoul Metropolitan Government's Real Estate Information Plaza, apartment sales volumes in Seoul remain high, with 12,000 units in October, 11,000 units in November, and 9,000 units in December.

Other loans, such as unsecured loans, decreased by about 600 billion KRW last month due to the inflow of Lunar New Year bonuses.

Corporate loans stood at 877.5 trillion KRW at the end of January, increasing by 8.6 trillion KRW. Loans to large corporations rose by 3.1 trillion KRW, while loans to small and medium-sized enterprises increased by 5.4 trillion KRW. Companies that had temporarily repaid loans to manage year-end financial ratios resumed borrowing, and demand for value-added tax payments also contributed to the increase. Corporate bonds also shifted to net issuance due to the resumption of fund management by investment institutions at the beginning of the year.

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