Jeonse Loans Decrease for the First Time Since 2017

[Asia Economy Reporter Song Hwajeong] In January, household loans decreased, and overall loans also declined for the first time since 2017.

According to the financial sector on the 6th, the outstanding balance of household loans from the five major banks?KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup?as of the 31st of last month was 707.6895 trillion KRW. This is 1.3634 trillion KRW less than the end of December last year (709.0528 trillion KRW). The decrease in household loans compared to the previous month is the first in seven months since May last year. Lee Byung-geon, a researcher at DB Financial Investment, analyzed, "The decrease in household loans is a very unusual phenomenon. Although household loans decreased by 3.1 trillion KRW in May last year, that was due to a base effect from the 9.4 trillion KRW increase in household loans in April caused by SK IE Technology subscription."

Last month, mortgage loans increased by 1.4 trillion KRW, which, although smaller than the same month last year, was a typical figure for January. However, despite the subscription boom for LG Energy Solution, unsecured loans decreased by 2.5 trillion KRW, showing a sluggish trend.

Notably, jeonse loans decreased for the first time since 2017. Group loans stood at 462.7 billion KRW, about half the increase seen in December, and jeonse loans, which had driven household loan growth, decreased by 181.7 billion KRW compared to the end of December. The researcher said, "Mortgage loans maintained a steady increase, but as far as we know, this is the first time since jeonse loans became significant in 2017 that the monthly outstanding balance of jeonse loans at the five major banks has decreased."

The decrease in jeonse loans suggests the need to pay attention to future changes in the household loan market. The researcher explained, "The household loan growth target submitted by commercial banks to the supervisory authorities is known to be in the 4% range. Despite the contraction in the unsecured loan market, the expectation of achieving this target without difficulty is based on the assumption that the jeonse loan market will continue to grow due to rising jeonse prices. Therefore, it is necessary to pay attention to the unusual phenomenon of jeonse loans decreasing for the first time."

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