Financial Sector Household Loans Decline for Two Consecutive Months... 1 Trillion Won Withdrawn This Year

[Image source=Yonhap News]

[Asia Economy Reporter Song Seung-seop] Household loans in the financial sector have decreased by nearly 1 trillion won since the beginning of this year. The rapid increase in household loans seen last year appears to have slowed down due to the financial authorities' strong suppression measures.

According to the Financial Supervisory Service on the 10th, household loans across all financial sectors decreased by 200 billion won last month. This marks a decline for two consecutive months following a 700 billion won decrease in January. In total, household loans have decreased by 900 billion won this year alone. As recently as September last year, household loans surged by 7.8 trillion won in just one month. After increasing by only 200 billion won in December, the figures have been negative since the start of this year.

The decline was led by the other loan sector, including credit loans. This month, the other loan sector shrank by 2.9 trillion won. Credit loans at commercial banks alone decreased by 1.3 trillion won, resulting in a total reduction of 1.9 trillion won. In December and January of last year, loan volumes also decreased by 2.2 trillion won and 2.6 trillion won, respectively.

Regarding mortgage loans, they increased by 2.6 trillion won this month. However, the growth rate has slowed compared to the 2.9 trillion won increase in January. Looking at commercial banks, jeonse loans increased by 1.4 trillion won, causing mortgage loans to rise by 1.8 trillion won, but this is less than the 2.2 trillion won increase in the previous month.

Household loans in the secondary financial sector decreased by 100 billion won. Although the decrease is smaller than the 200 billion won drop in January, the downward trend continues mainly in mutual finance institutions.

The financial authorities explained that this is due to strengthened household loan management. Loan interest rates have risen, and the borrower-based total debt service ratio (DSR) policy, which began this year, has been expanded. The decline in housing transactions was also cited as a factor contributing to the decrease in household loans.

A Financial Supervisory Service official stated, “The financial authorities will continue to promote a soft landing to ensure that the rapid increase in household debt, which expanded significantly during the COVID-19 recovery process, is maintained at a stable level.”

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