Household Loans Decrease for First Time in 3 Consecutive Months... "Real Estate Market Revitalization is a Variable"

February Household Loans Down 100 Billion Won from Previous Month
Increase in Mortgage Loans... Offset by Larger Decrease in Credit Loans
Expected Changes Due to Revitalization of Real Estate Market

[Asia Economy Reporter Minwoo Lee] Household loans in February decreased by 100 billion KRW compared to the previous month, marking the first time since statistics began in 2004 that there has been a decline for three consecutive months. This is unusual despite the easing of banks' lending attitudes toward households since the beginning of the year. If the policy to relax housing loan regulations is implemented in the future, it is expected that loan demand will increase again along with the revitalization of real estate market transactions.

According to the 'Financial Market Trends in February 2022' recently announced by the Bank of Korea on the 12th, the outstanding balance of household loans at banks as of the end of last month was 1,060.1 trillion KRW. This is a decrease of 100 billion KRW compared to the previous month. The decline has continued for three consecutive months since December last year.

During the same period, mortgage loans increased by about 2 trillion KRW on average per month, but other loans (credit loans) decreased even more significantly. Last month, credit loans decreased by about 1.9 trillion KRW, offsetting the increase in mortgage loans (about 1.8 trillion KRW). Baeseung Jeon, a researcher at Ebest Investment & Securities, explained, "The decrease in credit loans was influenced by a combination of government loan regulations, strengthened management by banks, a slowdown in housing transactions, and a decrease in demand for investment funds such as stocks."

In the case of corporate loans, the increase continued at an average level, leading overall loan growth. The cumulative increase rate of corporate loans from banks in January and February was 1.8%. However, the growth rate of SOHO (Small Office/Home Office) loans targeting individual business owners declined for seven consecutive months, and the growth rate of loans to small and medium-sized corporations also slightly decreased, leading to an assessment that corporate loans recorded the lowest growth rate since the COVID-19 pandemic.

The total loan growth rate for January and February was 0.9% (including policy mortgage loans). Typically, corporate loans tend to decrease at the end of the quarter in March, so the loan growth rate for the first quarter is expected to remain at a modest level in the low 1% range. However, since the household loan growth rate has entered the 5% range and some banks have recently shown signs of expanding household loan handling through preferential interest rate applications, there is also an analysis that the trend may shift to an increase after March.

If the policy to relax housing loan regulations is implemented in the future, it is expected that loan demand will expand again along with the revitalization of real estate market transactions. Otherwise, there is also a forecast that the additional interest rate may decrease. Dohah Kim, a researcher at Hanwha Investment & Securities, analyzed, "The banking sector is promoting growth centered on loans to small and medium-sized corporations," and "This year, the growth rate of won-denominated loans is expected to be around 5-6% compared to the same period last year, with a net increase of about 120 trillion KRW."

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