Soaring Jeonse Prices Push Five Major Banks' Jeonse Loans Past 100 Trillion Won for the First Time

Five Major Banks' October Jeonse Loans Reach 101.6828 Trillion KRW, Up 2.5% from Previous Month
First Time Jeonse Loans at Commercial Banks Exceed 100 Trillion KRW

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[Asia Economy Reporter Kim Hyo-jin] Due to the impact of the Lease Protection Act and other factors, jeonse prices have soared, leading to a rapid increase in jeonse loans at major commercial banks.

According to the banking sector on the 8th, the outstanding balance of jeonse loans at the five major commercial banks?KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup?stood at 101.6828 trillion won as of the end of October. This marks an increase of 2.5205 trillion won compared to the end of September (99.1632 trillion won). This is the first time the outstanding balance of jeonse loans at these banks has exceeded 100 trillion won.

The monthly increase in jeonse loans at the five major banks, which had fallen below 2 trillion won in May and June, recorded 2.0201 trillion won in July, 2.4157 trillion won in August, and 2.6911 trillion won in September. Although the increase slowed to 7.6 billion won during the first two weeks of October, the upward trend appears to have 'recovered' shortly thereafter.

Despite the shortage of jeonse listings, the rapid growth in jeonse loans is analyzed to be due to the significant rise in jeonse prices.

According to the Korea Real Estate Board, the apartment jeonse supply-demand index in Seoul for the first week of this month rose by 5.4 points from the previous week (124.8) to 130.1. This is the highest figure since the related statistics began to be published in July 2012.

The jeonse supply-demand index indicates the degree of shortage in jeonse supply. It is expressed on a scale from 1 to 200, with higher numbers indicating a greater shortage of supply.

According to data compiled by Real Estate 114, during the same period, Seoul apartment jeonse prices rose by 0.19% compared to the previous week, marking the largest increase since the first week of November 2015.

As jeonse loans increase so sharply, there are forecasts that the banking sector as a whole will begin to regulate the pace of jeonse lending. Woori Bank decided to conditionally limit the handling of its jeonse loan product, 'Woori Jeonse Loan,' until the end of this year starting from the 30th of last month.

A banking sector official said, "From a risk management perspective, other banks may also engage in total volume management by raising loan thresholds or through other measures."

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