Household Debt in Q3 Continues to Rise to 1870.6 Trillion Won... Mortgage Loans Up by 6.5 Trillion Won

Mortgage Loans 1,008 Trillion Won... Growth Maintained Despite High Interest Rates
Household Loans Decreased but Sales Credit Increased Due to Consumption Recovery
Household Debt Rises by 2.2 Trillion Won... 38 Consecutive Quarters of Growth

View of downtown apartments from ASEM Tower in Samseong-dong, Gangnam-gu, Seoul [Image source=Yonhap News]

The scale of household credit (debt) in the third quarter of this year increased by 2.2 trillion won compared to the previous quarter. Although household loans decreased due to the sharp rise in interest rates, sales credit increased as consumption recovered. In the case of mortgage loans, the total balance increased to an all-time high as demand for group loans and jeonse loans was maintained, but the growth rate slowed due to the deterioration of the real estate market.

According to the Bank of Korea on the 22nd, the household credit balance at the end of the third quarter of this year was 1,870.6 trillion won, an increase of 2.2 trillion won compared to the end of the previous quarter, setting a record high. Compared to the previous quarter, it has been increasing for 38 consecutive quarters since the second quarter of 2013. However, compared to the same period last year, it increased by 1.4%, recording the lowest growth rate ever.

Looking specifically at household credit, household loans amounted to 1,756.8 trillion won, a decrease of 300 billion won, while sales credit increased by 2.5 trillion won to 113.8 trillion won. This is interpreted to mean that household loans are decreasing due to the Bank of Korea's sharp base rate hikes increasing interest burdens, but consumption is still increasing.

In the case of household loans, the decrease in other loans narrowed, but the increase in mortgage loans slowed, turning into a decrease. The balance of mortgage loans was 1,007.9 trillion won, the largest ever. The growth rate compared to the previous quarter was 6.5%, slowing down from 8.7% in the last quarter. The increase in mortgage loans from non-bank deposit-taking institutions and other financial institutions shrank, but the increase from deposit banks rather expanded.

Regarding this, Park Chang-hyun, head of the Financial Statistics Team, explained, "Due to the contraction of the housing market, buying sentiment has weakened, causing individual mortgage loans to be sluggish, but group loans and jeonse deposit loans continue to increase."

Other loans amounted to 748.9 trillion won, shrinking by 0.9% compared to the previous quarter. The Bank of Korea stated, "Due to the rise in loan interest rates and continued loan regulations, the decline has continued for four consecutive quarters."

Sales credit increased to 113.8 trillion won, the largest ever, as consumption continued to rise after the lifting of COVID-19 social distancing measures. It increased by 2.5 trillion won compared to the previous quarter, mainly centered on credit specialized companies.

However, the growth rate shrank from 4.4% in the previous quarter to 2.5%. Team leader Park said, "Looking at the growth rate compared to the same period last year, it increased from 10.9% in the second quarter to 13.2% in the third quarter," adding, "It is still hard to say that consumption is weakening, and we need to observe the trend beyond the fourth quarter."

Park Chang-hyun, head of the Financial Statistics Team at the Economic Statistics Bureau of the Bank of Korea, is explaining the main features of household credit (provisional) for the third quarter of 2022 on the morning of the 22nd at the Bank of Korea in Jung-gu, Seoul. (Photo by Bank of Korea)

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