Household Loans Decrease by 3.6 Trillion Won in March... Decline Accelerates Due to Interest Rate Hikes

[Asia Economy Reporter Song Hwajeong] Household loans saw a significant decline last month due to rising loan interest rates.

According to the 'Household Loan Trends for March 2022' announced by the Financial Services Commission on the 13th, household loans across all financial sectors decreased by 3.6 trillion KRW last month. The year-on-year growth rate of the total household loan balance across all financial sectors was 4.7%, continuing the slowdown trend since the second half of last year. It fell from 10.0% in July last year to 7.1% in December, and was 6.3% in January and 5.6% in February this year.

Mortgage loans showed an increasing trend. Last month, mortgage loans across all financial sectors increased by 3 trillion KRW, slightly expanding the increase compared to the previous month (2.6 trillion KRW). Other loans, mainly in banks and mutual finance sectors, decreased by 6.6 trillion KRW, showing an expanding decline since the end of last year.

By sector, bank household loans decreased by 1 trillion KRW last month. Mortgage loans increased by 2.1 trillion KRW, centered on group loans (1.2 trillion KRW) and jeonse loans (1.2 trillion KRW), but other loans decreased by 3.1 trillion KRW, mainly credit loans (2.6 trillion KRW), expanding the decrease compared to the previous month.

Household loans in the secondary financial sector also decreased by 2.6 trillion KRW.

A Financial Services Commission official explained, "Although mortgage loans slightly increased last month, other loans such as credit loans significantly decreased, expanding the overall loan decline," adding, "This is due to rising loan interest rates, the expanded implementation of the Debt Service Ratio (DSR) on a borrower basis, and a slowdown in housing transactions."

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