Yeongkkeul and Debt Investment Continue... 'Record High' Household Debt of 1806 Trillion Won in Q2

Bank of Korea Announces 'Household Credit (Provisional) for Q2 2021'
Slowing Demand Growth for Housing Purchase and Jeonse Funds... Credit Loans Expand

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] Household debt reached a record high of 1,806 trillion won in the second quarter of this year. The increase compared to the same period last year exceeded 16.86 trillion won. While the demand for funds related to housing sales and jeonse (long-term lease) somewhat slowed down, the increase in credit loans expanded due to the influence of public offering subscription.

According to the 'Household Credit in the Second Quarter of 2021 (Provisional)' results announced by the Bank of Korea on the 24th, the total household credit balance in the second quarter was 1,805.9 trillion won. This is an increase of 4.12 trillion won compared to the previous quarter.

The actual increase compared to the same period last year was a whopping 16.86 trillion won, marking the highest ever since related statistics began in 2003. In the first quarter, it had increased by 15.32 trillion won. The Bank of Korea explained that the scale of household credit before 2003 was much smaller than now, so this is effectively a record high. Moreover, household credit has been breaking records every quarter.

The year-on-year growth rate was 10.3%, the third highest ever after the fourth quarter of 2016 (11.6%) and the second quarter of 2017 (10.4%).

Song Jae-chang, head of the Financial Statistics Team at the Bank of Korea's Economic Statistics Bureau, analyzed the increase in household credit, saying, "There was a demand for living expenses due to the continuation of COVID-19," and "Additionally, demand related to housing sales and jeonse also had an impact."

The household loan balance, which accounts for most of household credit, was 1,705.3 trillion won in the second quarter, an increase of 3.86 trillion won from the previous quarter. This is 390 billion won larger than the increase in the first quarter (3.47 trillion won).

The increase compared to the same period last year was 15.92 trillion won (10.3%), marking the largest amount since statistics began in 2003, similar to household credit.

By product, mortgage loans increased by 1.73 trillion won compared to the previous quarter. However, the increase was smaller than in the first quarter (2.04 trillion won).

While mortgage loans from deposit banks decreased, the increase in mortgage loans from other financial institutions expanded significantly. Mortgage loans from deposit banks increased by 480 billion won compared to the previous quarter, which is 1.02 trillion won less than the first quarter (1.5 trillion won). Mortgage loans from non-bank deposit-taking institutions increased by 160 billion won.

In the case of other loans such as credit loans, the increase expanded to 2.13 trillion won. The Bank of Korea analyzed that the increase in credit loans was significantly expanded due to the demand for funds related to public offering subscriptions.

By industry, the increase in other financial institutions recorded 1.71 trillion won, expanding the overall increase. Although the increase in other loans shrank, the increase in mortgage loans expanded significantly.

Non-bank deposit-taking institutions increased by 910 billion won compared to the end of the previous quarter, expanding the increase. On the other hand, the increase in deposit banks was 1.24 trillion won compared to the end of the previous quarter, shrinking the increase.

Meanwhile, the balance of sales credit in the second quarter increased by 270 billion won mainly in credit specialized companies as the consumption slump due to COVID-19 eased, reaching 10.06 trillion won.

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