Household Loan Growth Drops by 10 Trillion Won Last Month Due to High-Intensity Regulations

[Asia Economy Reporter Kim Hyo-jin] The Financial Services Commission and the Financial Supervisory Service announced on the 14th that household loans in the financial sector increased by 8.5 trillion KRW in December last year compared to the previous month. This increase is 10.2 trillion KRW less than the previous month (18.7 trillion KRW), reflecting the impact of the high-intensity loan regulations centered on banks that continued until the end of the year.

In December last year, household loans in the banking sector increased by 6.7 trillion KRW compared to the previous month. The increase was 6.9 trillion KRW less than the previous month (13.6 trillion KRW). Household loans in the secondary financial sector grew by 1.8 trillion KRW, which is 3.3 trillion KRW less than the previous month (5.1 trillion KRW).

During the same period, mortgage loans increased by 6.7 trillion KRW, which is 1 trillion KRW less than the previous month’s increase of 6.8 trillion KRW.

Mortgage loans in the banking sector increased by 6.3 trillion KRW, 1 trillion KRW more than the previous month (6.2 trillion KRW). In the secondary financial sector, they increased by 400 billion KRW, which is 2 trillion KRW less than the previous month (600 billion KRW).

Other loans, including unsecured loans, increased by 1.8 trillion KRW. Compared to the previous month’s increase of 11.9 trillion KRW, this is a decrease of 10.1 trillion KRW.

Other loans in the banking sector increased by 400 billion KRW, a decrease of 7 trillion KRW compared to the previous month (7.4 trillion KRW), while in the secondary financial sector, they increased by 1.4 trillion KRW, which is 3.1 trillion KRW less than the previous month (4.5 trillion KRW).

Overall household loans in the financial sector increased by 8.0% compared to the end of 2019. This is analyzed to be due to the demand for living expenses caused by the novel coronavirus disease (COVID-19), expansion of housing transactions, and reduced borrowing burden due to low interest rates.

An official from the financial authorities stated, "This year, we will closely monitor household loan trends and thoroughly check the implementation status of management measures. In addition, during the first quarter of this year, we will prepare an 'Advanced Household Debt Management Plan' to establish a repayment ability-centered screening practice and gradually shift the Debt Service Ratio (DSR) management standard to a borrower-level basis, ensuring a smooth landing of household debt."

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