Household Loans Increased by 700 Billion Won in June... First Semiannual Decrease

[Asia Economy Reporter Song Hwajeong] Household loans increased for three consecutive months last month, but on a semiannual basis, they decreased for the first time since statistics began in 2015.

According to the 'Household Loan Trends for June 2022' announced by the Financial Services Commission on the 13th, household loans across all financial sectors increased by 700 billion KRW last month. The increase was smaller compared to the previous month (1.7 trillion KRW). The year-on-year growth rate was 2.7%, showing a decline again after a slight rise last month, continuing the slowdown trend since the second half of last year.

In the first half of this year, household loans across all financial sectors decreased by 800 billion KRW, marking the first semiannual decline since statistics began in 2015. In the first half of 2020, loans increased by 36.4 trillion KRW, and in the second half of 2020, they rose by 75.8 trillion KRW. Last year, loans increased by 63.5 trillion KRW in the first half and 44 trillion KRW in the second half.

Mortgage loans saw an expanded increase compared to the previous month, but other loans sharply decreased, reducing the overall household loan growth. Last month, mortgage loans increased by 2.8 trillion KRW, expanding from 1.5 trillion KRW in the previous month. Other loans, mainly credit loans and non-mortgage loans, decreased by 2.1 trillion KRW, returning to a decline after one month.

By financial sector, both bank and secondary financial institution household loans showed a reduced increase compared to the previous month, but mutual finance sector reversed its continuous decline this year into an increase. Last month, bank household loans increased by 200 billion KRW, slightly less than the 300 billion KRW increase in the previous month. Mortgage loans increased by 1.4 trillion KRW, centered on jeonse loans (900 billion KRW) and group loans (700 billion KRW), expanding from 800 billion KRW last month. Other loans decreased by 1.2 trillion KRW, mainly credit loans (800 billion KRW), widening the decline from 500 billion KRW in the previous month.

Household loans in the secondary financial sector increased by 400 billion KRW, mainly in savings banks (400 billion KRW), mutual finance (200 billion KRW), and insurance (100 billion KRW) sectors.

A Financial Services Commission official stated, "Mortgage loans increased due to expanded execution of group loans and continued demand for jeonse-related funds, while other loans such as credit loans turned to a decrease due to rising interest rates and the payment of loss compensation funds to small business owners." The official added, "As interest rates continue to rise, the burden on borrowers and risks to financial companies may increase, so financial authorities will continue efforts to ensure a soft landing for household debt."

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