Household Loans Increased by 10.1 Trillion Won in January... Growth Rate Expanded to 8.5%

Housing transactions and public offering subscriptions continue to drive funding demand, expanding the year-on-year growth margin

[Asia Economy Reporter Park Sun-mi] Amid the spread of COVID-19 and the boom in the stock and real estate markets, household loans across all financial sectors increased by 10.1 trillion KRW last month, raising the growth rate to about 8.5%, which is double the level of January 2020.

According to the Financial Services Commission and the Financial Supervisory Service on the 10th, household loans across all financial sectors increased by 10.1 trillion KRW in January this year. This is 1.3 trillion KRW more than the previous month's increase of 8.8 trillion KRW, and 7.9 trillion KRW more than the 2.2 trillion KRW increase in January 2020. At the end of January, the outstanding household loans across all financial sectors rose by 8.5% compared to the same period last year, doubling the 4.4% growth rate of 2020. By sector, loans increased by 7.6 trillion KRW in banks and 2.5 trillion KRW in the secondary financial sector.

By loan type, mortgage loans increased by 5.8 trillion KRW in January. Although this increase is 900 billion KRW less than the previous month, it is 2.8 trillion KRW higher compared to January last year, when it increased by 3 trillion KRW.

Credit loans increased by 3 trillion KRW in January this year, significantly expanding compared to -800 billion KRW in January 2019 and +200 billion KRW in January 2020. This is also a sharp increase compared to December last year, when the increase was limited to 800 billion KRW due to the financial authorities' tightening pressure. The total increase in other loans, including credit loans, across all financial sectors was 4.3 trillion KRW in January.

Among these, other loans in the banking sector, centered on credit loans, increased by 2.6 trillion KRW, expanding by 2.2 trillion KRW compared to the previous month (+400 billion KRW) and by 3.2 trillion KRW compared to January 2020 (-600 billion KRW). Despite the banking sector's continued efforts to strengthen credit loan management, the increase is attributed to rising demand for funds related to stock subscriptions such as public offerings. The secondary financial sector also saw other loans increase by 1.7 trillion KRW in January, mainly driven by credit loans.

The financial authorities evaluated, "Although the increase in household loans in January narrowed compared to the second half of last year, demand for funds such as housing transactions and public stock subscriptions continued, expanding the year-on-year increase. However, the growth in credit loans, which showed a sharp increase in the second half of last year, has somewhat eased thanks to active management efforts."

They added, "While paying close attention to the increase in credit loans, the financial authorities plan to manage so that there are no difficulties in supplying funds for Lunar New Year expenses and supporting industries with close contact restrictions. Within the first quarter, we will prepare a ‘Household Debt Management Plan’ to establish a screening practice focused on repayment ability and gradually shift the Debt Service Ratio (DSR) management standard to the borrower level, thereby steadily promoting the soft landing of household debt."

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