Is the Era of 'Yeongkkeul' and 'Bittou' Over? Household Loans Decrease After 8 Months

As of the end of January, 708.6333 trillion KRW decreased compared to the previous month
Increase in mortgage loans also reduced to half the level

[Asia Economy Reporter Sim Nayoung] The outstanding household loans of the five major commercial banks decreased for the first time in eight months in January. This was due to the simultaneous impact of tightened loan limit policies at the beginning of the new year, rising interest rates, and the stagnation of the housing and stock markets. There is speculation that the 'Yeongkkeul' and 'Bittu' phenomena, which spread like wildfire last year, may have come to an end.

According to KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup banks on the 3rd, the outstanding household loans of the five major banks as of the end of January (27th) amounted to 708.6333 trillion won. This is 41.96 billion won less than December last year (709.0529 trillion won). It is the first time in seven months since May last year that household loans have decreased compared to the previous month.

Mortgage loans increased in January as well, but the growth rate is narrowing. As of the end of January, the outstanding mortgage loans of the five major banks stood at 506.5127 trillion won, an increase of 1.1081 trillion won compared to the previous month (505.4046 trillion won). This shows a significant slowdown compared to 2.1122 trillion won in November and 2.0761 trillion won in December last year.

Personal credit loan balances also declined for the second consecutive month. In January, it was 138.1787 trillion won, down 1.3785 trillion won from the previous month. The decrease in December was 1.5766 trillion won.

The halt in loan growth is due to a combination of factors: reduced borrowing limits, rising loan interest rates, and difficulty finding profitable investment opportunities with borrowed funds. The DSR (Debt Service Ratio) regulation, which limits borrowers' principal and interest repayments to 40% of their annual income, has been applied from January for total loans exceeding 200 million won, reducing the amount that can be borrowed. Following the Bank of Korea's base rate hike last month, interest rates on credit loans and jeonse loans (based on the four major banks) also rose to 4.70% and 4.86% per annum, respectively, and are expected to soon reach 5%. Mortgage loan interest rates also increased, with variable rates ranging from 3.71% to 5.21% per annum.

A representative from a commercial bank said, "Seoul apartment prices have turned downward, and the KOSPI index plunged 10% in January, so the asset market's full recovery timing is uncertain, leaving no place to invest even if money is borrowed." He added, "This is evident from the fact that loans that temporarily surged during the LG Energy Solution IPO subscription last month have returned to the banks."

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