Household Loans Decrease by 1 Trillion Won in July... Decline Resumes After 4 Months
[Asia Economy Reporter Song Hwajeong] Household loans returned to a declining trend last month after four months.
According to the 'Household Loan Trends for July 2022' announced by the Financial Services Commission on the 10th, household loans across all financial sectors decreased by 1 trillion KRW last month. The year-on-year growth rate was 1.7%, showing a continued slowdown trend since the second half of last year.
The overall household loans decreased as the increase in mortgage loans slowed compared to the previous month and the decrease in other loans expanded significantly. Last month, mortgage loans increased by 2.5 trillion KRW, narrowing the increase compared to the previous month (2.8 trillion KRW). Other loans, mainly credit loans, decreased by 3.6 trillion KRW, significantly expanding the decrease compared to the previous month (2.1 trillion KRW).
By sector, household loans in both the banking sector and the secondary financial sector turned to a decrease, but savings banks (400 billion KRW) and insurance (200 billion KRW) sectors continued to show an increase. Last month, household loans in the banking sector decreased by 300 billion KRW. Mortgage loans increased by 2 trillion KRW, centered on group loans (1.3 trillion KRW) and jeonse loans (1.1 trillion KRW), expanding the increase compared to last month (1.4 trillion KRW). Other loans decreased by 2.2 trillion KRW, mainly credit loans (1.9 trillion KRW), expanding the decrease compared to the previous month (1.2 trillion KRW). Household loans in the secondary financial sector decreased by 800 billion KRW, mainly in mutual finance (1.2 trillion KRW) and credit card companies (200 billion KRW).
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A Financial Services Commission official explained, "Although demand for funds related to group loans and jeonse continues for mortgage loans, the increase narrowed compared to the previous month due to sluggish housing sales transactions," and added, "Other loans such as credit loans saw an expanded decrease compared to the previous month as loan repayments increased due to interest burden from rising interest rates."
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