Household Loans Decrease by 700 Billion Won in January... Household Debt Growth Continues to Slow

[Asia Economy Reporter Song Hwajeong] Household loans decreased last month due to government regulations on household debt and interest rate hikes. The rapid increase in household debt during the COVID-19 recovery process is showing a continuous slowdown.

According to the "Household Loan Trends for January 2022" announced by the Financial Services Commission on the 10th, household loans across all financial sectors decreased by 700 billion KRW last month. This is the first decline in eight months since May last year. The year-on-year growth rate of total household loan balances across all financial sectors was 6.3%, down from 7.1% the previous month. The growth trend is continuously slowing down. It fell from 9.2% in September last year to 8.6% in October, 7.7% in November, 7.1% in December, and dropped to the 6% range last month.

By loan category, housing mortgage loans across all financial sectors increased by 2.9 trillion KRW last month, slightly expanding from 2.6 trillion KRW in the previous month but maintaining a relatively stable level. Other loans decreased by 3.6 trillion KRW due to the inflow of Lunar New Year bonuses and the expanded implementation of the Debt Service Ratio (DSR), widening the decrease from 2.4 trillion KRW in the previous month.

By financial sector, household loans in the banking sector decreased by 400 billion KRW last month. Housing mortgage loans increased by 2.2 trillion KRW, mainly due to jeonse loans (1.4 trillion KRW), but other loans decreased by 2.6 trillion KRW, continuing the decline from the previous month.

Household loans in the secondary financial sector also decreased by 300 billion KRW, mainly in mutual finance.

A Financial Services Commission official stated, "The rapid increase in household debt during the COVID-19 recovery process is continuously slowing down," adding, "The financial authorities will continue efforts to manage the household debt growth rate at a stable level this year while simultaneously promoting efforts to improve the qualitative soundness of household debt."

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