Did Loan Regulations Work? Household Loan Growth Halved in August

Household Loans Increased by 8.5 Trillion Won Last Month

[Image source=Yonhap News]

[Asia Economy Reporter Kim Jin-ho] Last month, the increase in household loans across all financial sectors significantly decreased compared to the previous month. This is analyzed to be influenced by the refund of subscription deposits for public offering stocks and the financial authorities' comprehensive strengthening of household loan management.

According to the 'August Household Loan Trends' announced by the Financial Services Commission on the 8th, household loans across all financial sectors increased by 8.5 trillion KRW last month, significantly lower than the previous month's increase of 15.3 trillion KRW.

The sharp reduction is due to the increase in other loans such as unsecured loans shrinking to 1.4 trillion KRW from 7.9 trillion KRW in the previous month. On the other hand, mortgage loans steadily increased with bank sector jeonse (key money deposit) loans (2.8 trillion KRW) and group loans (1.9 trillion KRW), recording a similar increase to the previous month.

By sector, household loans in the banking sector increased by 6.2 trillion KRW, considerably lower than the 9.6 trillion KRW in the previous month. While mortgage loans showed a similar increase, unsecured loans decreased significantly. The secondary financial sector also increased by 2.3 trillion KRW, down from 5.7 trillion KRW in the previous month. The increase in mutual finance and insurance sectors was significantly reduced.

The government's stringent loan regulations are also believed to have had an impact. Under the government's policy to strengthen total volume management, the credit loan limits of major commercial banks and internet banks were all reduced to below 50 million KRW. Existing borrowers are also receiving higher interest rates and lower limits upon contract renewal.

However, the financial authorities pointed out that although household loans (8.5 trillion KRW) last month increased less than the previous month, they remain high compared to the pre-COVID-19 period. In particular, they forecast many factors increasing loans in September, such as housing-related fund demand including jeonse loans due to autumn moving season and continued initial public offerings (IPO).

A Financial Services Commission official explained, "We will continue to closely monitor household loan trends and maintain meticulous management until the increase in household loans stabilizes."

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