November Household Loans Increase by a Record 13.6 Trillion Won... Last Rush for 'Yeongkkeul' Before Credit Loan Regulations

BOK "Preemptive Demand Before Credit Loan Regulations"... Surge in Other Loans
SME Loans Increase by 7 Trillion Won... Largest Since 2004

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] In November, the increase in bank household loans expanded to 13.6 trillion won. This was the result of increased credit loan expansion before the regulation was implemented, combined with loan demand for stock investment.

According to the "Financial Market Trends in November 2020" released by the Bank of Korea on the 9th, bank household loans increased by 13.6 trillion won last month, marking the highest level for November since related preliminary reports began in 2004. The monthly increase in bank household loans had reached a record high of 11.7 trillion won in August and has expanded again since last month.

By sector, mortgage loans increased by 6.2 trillion won as demand for sales transactions in the metropolitan area and provinces continued, and already approved group loans were executed. This marks a continuous increase in the 6 trillion won range since August. On the other hand, jeonse (key money deposit) loans increased by 2.6 trillion won, a smaller increase compared to last month’s 2.3 trillion won.

A Bank of Korea official explained, "As housing transactions around metropolitan areas and provincial metropolitan cities have increased recently, credit loans for related fund preparation have also increased," adding, "There was also a steady demand for public offering subscription."

Other loans, including credit loans, increased by 7.4 trillion won, the largest increase since 2004. Compared to the 3 trillion won increase seen in September and October, this is nearly double.

It is analyzed that credit loans surged before the authorities’ regulation was implemented on the 30th of last month. A Bank of Korea official stated, "It appears that preemptive demand occurred ahead of the credit loan regulation implementation, causing a significant increase in other loans."

In November, bank corporate loans recorded 6.7 trillion won. Loans to large corporations decreased by 300 billion won due to a slowdown in working capital demand. Loans to small and medium-sized enterprises increased by 7 trillion won. Steady loan demand from individual business owners and small and medium-sized corporations, along with continued financial support from financial institutions, seems to have sustained a favorable growth trend.

A Bank of Korea official explained, "Looking only at the record November increase in corporate loans this year, loans to both large corporations and small and medium-sized enterprises increased the most since 2004."

Regarding the outlook for household loans in December, the official predicted, "Due to factors such as year-end bonuses, the increase in household loans tends to shrink compared to October and November," adding, "Considering seasonal factors and the effects of regulations, the increase is expected to be smaller than in November."

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