[Financial Stability Status] Non-bank Household Loans Shift to Increase... "Loans for Seniors 60+ and Self-employed Rise"

Increase in Non-Deposit Loan Ratio... "Impact of Growing Investment Demand in Commercial Real Estate Market"
Non-Bank Sector, Loan Growth Rate Up for 60s and Older & Self-Employed

[Asia Economy Reporter Jang Sehee] At the end of last year, household loans from non-bank financial institutions increased by about 500 trillion won, reversing the decline trend to an increase after one year. This was due to increased demand for stock credit loans and non-housing mortgage loans (bijudamdae). Additionally, the loan growth rates for those aged 60 and over and self-employed individuals were found to be high.

According to the Bank of Korea's 'Financial Stability Status (March 2021)' data on the 25th, 82.7% of last year's loan increase amount (23.7 trillion won) was accounted for by credit loans and unsecured loans. Furthermore, housing mortgage loans and bijudamdae also showed a reversal to an increase.

The ratio of bijudamdae, which was -2.2% in 2019, turned to an increase of 0.4% at the end of last year as investment demand in the commercial real estate market grew. The transaction volume surged from 156,000 cases in the first half of 2020 to 180,000 cases in the second half.

During the same period, unsecured loans increased by 9.8% due to increased demand for living expenses among low-income groups.

Among non-bank institutions, loans to medium-credit borrowers accounted for 87% of the increase in unsecured loans in 2020. In particular, the loan growth rates for those aged 60 and over (21.7%) and self-employed individuals (15.9%) were higher than those of other age groups (5.0~14.7%) and non-self-employed individuals (8.8%).

On the other hand, in the case of banks, high-credit borrowers accounted for most loans, and the loan growth rates for those aged 30 and under (29.7%) and non-self-employed individuals (21.1%) were higher than those of other age groups (14.6~26.5%) and self-employed individuals (19.1%).

Meanwhile, housing mortgage loans showed a 0.1% increase centered on insurance companies' housing mortgage loans, as the loan regulation level for non-bank institutions was looser than that of banks and the interest rate competitiveness of insurance companies strengthened.

The report emphasized, "It is necessary to restrain excessive leverage expansion when economic agents seek profits," and "a policy approach is needed to ensure that financial accessibility for low-income groups is not restricted."

It also explained, "For low-income groups struggling due to the prolonged COVID-19 pandemic, it is necessary to induce relief of financial burdens for medium- and low-credit borrowers by promoting competition among financial sectors for mid-interest loan products."

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