Slight Increase in Household Loans in August Due to Strengthened Loan Management... Credit Loans Remain Flat

A bank in downtown Seoul on the 1st, where financial authorities are implementing strict loan regulations. / Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Park Sun-mi] The growth of household loans slowed down last month due to the impact of interest rate hikes and reductions in loan limits.

According to the five major commercial banks?Kookmin, Shinhan, Hana, Woori, and NH Nonghyup?as of the end of last month, the total household loan balance stood at 698.8149 trillion won. This was an increase of only 3.5067 trillion won compared to the 695.3082 trillion won recorded at the end of July. The increase amount is only about half of the 6.2009 trillion won increase seen in July.

The balance of mortgage loans at the five major banks last month was 493.4148 trillion won. This is an increase of 3.8311 trillion won from the July mortgage loan balance of 489.5837 trillion won, marking the largest increase this year. This is interpreted as partly reflecting demand to secure mortgage loans before the interest rate hikes, as housing prices continue to soar.

On the other hand, the balance of unsecured loans remained at 140.8942 trillion won, similar to the 140.8930 trillion won in July. This contrasts with the 1.8636 trillion won increase in unsecured loan balances last month due to large public offering subscriptions. Banks raising loan interest rates and reducing limits to manage unsecured loans also contributed to curbing the growth of unsecured loans.

Meanwhile, NH Nonghyup Bank stopped issuing new mortgage loans from the 24th of last month and reduced the maximum unsecured loan limit from the previous 200 million won to below 100 million won, capped at 100% of annual income. Hana Bank also limited personal unsecured loan limits to within annual income starting from the 27th of last month. Kookmin, Shinhan, and Woori Banks will implement measures this month to limit unsecured loan limits to within annual income. Overdraft accounts exceeding 50 million won will also disappear.

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