Household Loans Decrease by 8.7 Trillion Won in 2022... First Decline Recorded

Financial Services Commission Announces 'Household Loan Trends in 2022'

[Asia Economy Reporter Yu Je-hoon] Last year, household loans in the financial sector showed a decline for the first time since statistics have been compiled.

The Financial Services Commission announced on the 12th that household loans across all financial sectors decreased by 8.7 trillion KRW (0.5%) last year, according to provisional data. This is the first time since related statistics began being compiled in 2015 that household loans have decreased based on year-end balances.

[Image source=Yonhap News]

Looking at recent changes in household loans, the increase amounts and rates were 75.2 trillion KRW (5.9%) in 2018, 56.2 trillion KRW (4.2%) in 2019, 112.3 trillion KRW (8.0%) in 2020, and 107.5 trillion KRW (7.1%) in 2021, showing strong growth. However, last year, the growth in mortgage loans slowed and other loans decreased, leading to an overall reduction in household loans.

In the case of mortgage loans, there was a total increase of 27 trillion KRW last year, but the growth was significantly lower compared to the previous year (69.2 trillion KRW). Other loans, mainly credit loans and non-housing secured loans, decreased by 35.6 trillion KRW last year. Considering that other loans had increased by 38.3 trillion KRW the previous year, this marks a shift to a decline.

By financial sector, household loans in the banking sector decreased by 2.7 trillion KRW. Mortgage loans increased by 20 trillion KRW, mainly due to group loans (9.4 trillion KRW) and jeonse loans (8.4 trillion KRW), but the growth was significantly reduced compared to the previous year (56.9 trillion KRW). Other loans, mainly credit loans, decreased by 22.8 trillion KRW, turning into a decline.

Last year, household loans in the secondary financial sector increased in insurance (3.7 trillion KRW) and savings banks (2.3 trillion KRW), but decreased in mutual finance (10.6 trillion KRW decrease) and specialized credit finance companies (1.3 trillion KRW decrease), resulting in an overall decrease of 5.9 trillion KRW.

A Financial Services Commission official stated, "Last year, the growth in mortgage loans slowed due to factors such as a slowdown in housing transactions, and other loans such as credit loans decreased due to regulatory impacts including interest rate hikes and the expanded implementation of the Debt Service Ratio (DSR) on a borrower basis." The official added, "The authorities will continue to faithfully implement measures to normalize loan regulations and make ongoing efforts to manage household debt stably."

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