Household Loan Decline Last Month... Will the Downtrend Continue?

[Asia Economy Reporter Song Hwajeong] Household loans are showing a declining trend due to the government's strong household debt regulations and interest rate hikes. In particular, bank household loans have decreased for two consecutive months for the first time since statistics began in 2004.

According to the Financial Services Commission and the Bank of Korea on the 13th, household loans across all financial sectors decreased by 700 billion KRW last month. This marks 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 rate continues to slow 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, last month, housing mortgage loans across all financial sectors increased by 2.9 trillion KRW, 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 compared to 2.4 trillion KRW in the previous month.

By sector, bank household loans decreased by 400 billion KRW last month. Mortgage loans increased by 2.2 trillion KRW, mainly driven by jeonse loans (1.4 trillion KRW), but other loans decreased by 2.6 trillion KRW, continuing the decline from the previous month. This is a larger drop compared to the 2.2 trillion KRW decrease in December last year. This is the first time since statistics began in 2004 that bank household loans have decreased for two consecutive months.

An official from the Bank of Korea explained, "In January, bank household loans slightly decreased again due to an expanded decrease in other loans compared to the previous month," adding, "Other loans decreased further due to rising loan interest rates, continued credit loan management by banks, strengthened government loan regulations, and seasonal factors such as the inflow of holiday and performance bonuses."

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