Due to High-Intensity Loan Regulations... Household Debt Growth Sharply Slowed Last Month

Financial Services Commission Announces 'Household Loan Trends for December 2021'

[Image source=Yonhap News]

[Asia Economy Reporter Kim Jin-ho] Due to the strong total household debt regulations imposed by financial authorities, the increase in household loans in the financial sector significantly slowed down last month. In particular, influenced by the year-end bonus inflows, the balance of other loans, including unsecured loans, decreased by as much as 2.4 trillion KRW compared to the previous month.

According to the 'Household Loan Trends for December 2021' data released by the Financial Services Commission on the 13th, household loans across all financial sectors increased by only 200 billion KRW last month. This is a decrease of a whopping 5.7 trillion KRW compared to the previous month (5.9 trillion KRW).

First, mortgage loans increased by 2.6 trillion KRW. The increase in mortgage loans slowed compared to the previous month (3.9 trillion KRW) due to factors such as a decline in housing transactions. Additionally, the balance of other loans decreased by 2.4 trillion KRW due to reductions in unsecured loans caused by year-end bonus inflows and reductions in credit card loans from credit finance companies.

By sector, household loans in the banking sector decreased by 200 billion KRW. Loans in the secondary financial sector increased by 400 billion KRW, but the increase was significantly reduced compared to the previous month (3 trillion KRW).

The financial authorities evaluated that the increase in household debt, which had surged rapidly, is gradually stabilizing, citing that the increase in mortgage loans was the lowest during the year and that the balance of other loans such as unsecured loans decreased.

A Financial Services Commission official explained, "We proactively managed the rapidly increasing household debt (220 trillion KRW) over the past two years to prevent it from becoming a risk factor for our economy ahead of the full normalization of monetary policy, and we will continue to respond steadily going forward."

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