Household Loans Decline for Two Consecutive Months... 'Yeongkkeul' and 'Bittou' Clearly Subside

As of the 23rd, Total Household Loans at the Five Major Banks Amount to 706.854 Trillion KRW
Decreased by 835.5 Billion KRW from the Previous Month

Impact of Loan Regulations, Real Estate and Stock Market Slump, and Interest Rate Hikes

[Image source=Yonhap News]

[Asia Economy Reporter Shim Nayoung] Household loans have declined for two consecutive months. This is due to reduced loan demand caused by government loan regulations, stagnation in the real estate and stock markets, and rising interest rates. The recent enthusiasm of the 2030 generation for the Youth Hope Savings, which offers an effective annual interest rate of around 9%, clearly indicates that 'Yeongkkeul' (borrowing to the limit) and 'Debt Investment' (borrowing to invest) have entered a noticeable lull.

According to the five major commercial banks on the 25th, the total household loan balance at KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup banks stood at 706.854 trillion KRW (as of the 23rd), down by 835.5 billion KRW from the end of January (707.6895 trillion KRW). In particular, real estate loans retreated. The outstanding balance of mortgage loans was 506.135 trillion KRW, a decrease of 683.1 billion KRW from the previous month (506.8181 trillion KRW). The balance of unsecured loans (137.0634 trillion KRW) increased by 21.3 billion KRW compared to January, remaining relatively stable.

A representative from a commercial bank explained, "Due to the DSR (Debt Service Ratio) regulation, which limits borrowers' principal and interest repayments in proportion to their annual income, the amount available for loans itself has decreased. Loan interest rates have risen to the 4% range, and even if people borrow money, it has become difficult to find investment opportunities that yield profits, creating a complex set of factors."

With the stock market sharply declining due to the Russia-Ukraine war and the real estate market failing to recover from stagnation, money is flowing into deposits. In particular, the balance of demand deposit accounts, which allow withdrawals and deposits at any time, has increased. As of February, the balance of demand deposits at the five major banks was 710.262 trillion KRW, up by 9.852 trillion KRW from the end of January (700.41 trillion KRW).

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