In December, Bank Household Loans Decreased for the First Time in 7 Months... Down by 200 Billion Won

Announcement of Financial Market Trends in December 2021

The era of near-zero interest rates that began after the COVID-19 crisis has come to an end after 1 year and 8 months. On the 25th, the Monetary Policy Board of the Bank of Korea held a meeting to decide on monetary policy direction and raised the base interest rate by 0.25 percentage points from 0.75% to 1%. The photo shows a loan-related notice posted on the exterior wall of a bank in downtown Seoul on the same day. Photo by Moon Honam munonam@

[Asia Economy Reporter Jang Sehee] In December of last year, the growth of household loans in the banking sector slowed down. This was due to loan regulations by financial authorities and interest rate hikes. Additionally, there was a year-end effect such as bonus payments.

According to the "Financial Market Trends in December 2021" released by the Bank of Korea on the 13th, as of the end of December last year, household loans at banks stood at 1,060.7 trillion won, a decrease of 200 billion won compared to the previous month.

This marks the first decline in household loans in seven months since May last year (-1.6 trillion won). It is also the first time since related statistics began in 2004 that loans decreased in December.

An official from the Bank of Korea analyzed, "In December, the government and financial sector continued to manage the growth rate of household loans, year-end bonus inflows occurred, and housing mortgage loans decreased due to a slowdown in housing sales transactions," adding, "The effect of rising loan interest rates also appears to have partially manifested."

Among household loans, housing mortgage loans such as jeonse loans increased, but other loans such as unsecured loans decreased. Jeonse deposit loans increased by 1.8 trillion won, leading to a total increase of 2 trillion won in housing mortgage loans. The increase in housing mortgage loans was the second lowest on record since February 2018 (1.8 trillion won).

Meanwhile, on an annual basis, household loans increased by 71.8 trillion won last year, marking the third largest increase since related statistics began, following 2020 (100.6 trillion won) and 2015 (78.2 trillion won).

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