Household Debt Hits Record High of 1,844 Trillion Won in Q3... Mortgage Loans Increase Despite Unprecedented Regulations

Deposit Banks See 21.1 Trillion KRW Increase in Mortgage Loans
BOK: "Financial Authorities' Loan Regulations Reduce Growth Across All Sectors"

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] In the third quarter of this year, household debt increased by 36.7 trillion KRW, bringing the total balance to 1,844.9 trillion KRW. As housing transaction demand continued, mortgage loans turned to an increase once again.

According to the "Household Credit (Provisional) for Q3 2021" released by the Bank of Korea on the 23rd, the household credit balance at the end of the third quarter was 1,844.9 trillion KRW, an increase of 36.7 trillion KRW compared to the end of the previous quarter. The increase was 6.8 trillion KRW less than the 43.5 trillion KRW increase in the second quarter. Household credit, which can be considered household debt, combines household loans and sales credit such as credit card usage.

As of the end of the third quarter, the household loan balance was 1,744.7 trillion KRW, up 37 trillion KRW from the previous quarter. In particular, mortgage loans increased by 20.8 trillion KRW due to continued demand for funds for housing sales and jeonse (long-term lease) transactions, as well as the expansion of group loans. This is 3.5 trillion KRW more than the 17.3 trillion KRW increase in the previous quarter.

Song Jae-chang, head of the Financial Statistics Team at the Bank of Korea, explained, "The demand for funds for housing sales and jeonse transactions continued, and group loans also expanded."

Deposit Banks' Mortgage Loans Increase by 21.1 Trillion KRW... Loans from Other Financial Institutions Decrease

By sector, loans from deposit banks increased, while loans from non-bank and other financial institutions decreased. The increase in loans from deposit banks in the third quarter was 21.1 trillion KRW, up from 12.4 trillion KRW in the previous quarter. Mortgage loans recorded 16.4 trillion KRW, showing a significant increase, while other loans decreased. The Bank of Korea explained that loans from deposit banks increased significantly, centered on mortgage loans.

Loans from non-bank deposit-taking institutions increased by 8.2 trillion KRW compared to the previous quarter, a smaller increase than the 9.1 trillion KRW in the previous quarter. While mortgage loans expanded by 2.8 trillion KRW compared to the previous quarter, the growth of other loans slowed down.

Loans from other financial institutions increased by 7.7 trillion KRW, a sharp decrease in the increase compared to 19.6 trillion KRW in the previous quarter. Both mortgage loans and other loans decreased in other financial institutions.

The balance of sales credit was 100.2 trillion KRW, down 0.2 trillion KRW compared to the previous quarter.

Meanwhile, Team Leader Song evaluated, "Due to the financial authorities' strengthened loan regulations, the increase in all sectors has generally narrowed." He added, "In particular, for other financial institutions, the increase has narrowed due to credit loan limit reductions, etc."

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