Did Total Loan Volume Control Work? Household Loan Growth Slowed Last Month

Announcement of Household Loan Trends in October

[Image source=Yonhap News]

[Asia Economy Reporter Jin-ho Kim] As the government and banks strengthened the management of total loan volume, the increase in household loans last month appears to have slowed down.

According to the 'Household Loan Trends in October' announced by the Financial Services Commission on the 10th, household loans across all financial sectors increased by 6.1 trillion KRW last month. The scale of household loans peaked at 15.3 trillion KRW in July, then continuously eased with increases of 8.6 trillion KRW in August, 7.8 trillion KRW in September, and 6.1 trillion KRW in October.

Increases in mortgage loans and other loans such as credit loans also significantly decreased. Mortgage loans recorded an increase of 5.3 trillion KRW, down by 1.4 trillion KRW from the previous month’s 6.7 trillion KRW, due to a decline in housing transactions. The increase in other loans also shrank from 1.2 trillion KRW in September to 800 billion KRW last month.

By financial sector, household loans in the banking sector increased by 5.2 trillion KRW, considerably lower than the 6.4 trillion KRW in the previous month. Mortgage loans decreased compared to the previous month, and credit loans amounted to 600 billion KRW, mostly accounted for by Toss Bank (500 billion KRW), which began operations in October. Credit loans from the five major commercial banks decreased by 200 billion KRW. The secondary financial sector also saw an increase of 900 billion KRW, down from 1.5 trillion KRW in the previous month.

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

The Financial Services Commission assessed that household debt is stabilizing as the increase has gradually slowed since peaking in July. A Financial Services Commission official stated, "We will continue efforts to ensure the smooth landing of household debt, including the thorough implementation of strengthened household debt management measures."

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