Real Estate 'Stirs', Household Loans in Financial Sector 'Soar'... 2.8 Trillion KRW Increase in May

Weekly Increase in Apartment Sale Prices in Seoul, Incheon, and Other Areas

As the real estate market stirs, the increase in household loans in the banking sector is becoming more pronounced.

According to the 'Household Loan Trends in May 2023' released by the Financial Services Commission and the Financial Supervisory Service on the 11th, household loans in the financial sector increased by 2.8 trillion won compared to the previous month. This marks two consecutive months of growth following an increase of 200 billion won in April.

The reason for the continued rise in household loans is attributed to changes occurring in the real estate market, which had been stagnant since last year. Although a nationwide downward trend continues, an upward trend is emerging mainly in key areas such as Seoul and Incheon.

[Image source=Yonhap News]

According to the Korea Real Estate Board, as of the 8th, the weekly apartment sale prices nationwide decreased by 0.02% compared to the previous week, narrowing the decline from the previous week's 0.04% decrease. Some regions continue to show an increase. By city and province, sale prices rose in Sejong (0.18% increase), Seoul (0.04% increase), and Incheon (0.04% increase).

As a result, mortgage loans in the financial sector are also showing signs of revival. By loan category, the balance of housing mortgage loans increased by a total of 3.6 trillion won. Although mortgage loans in the secondary financial sector decreased by 600 billion won, the banking sector's mortgage loans increased by 4.3 trillion won. Other loans decreased by 800 billion won in both the banking and secondary financial sectors.

By financial sector, the increase in household loans was particularly evident in the banking sector. Household loans in banks increased by 4.2 trillion won. In the case of mortgage loans, while jeonse loans decreased by 600 billion won, policy mortgages (2.8 trillion won), general individual mortgage loans (2 trillion won), and group loans (100 billion won) all increased, continuing the upward trend from the previous month. Other loans saw a reduced decline overall, with credit loans turning to an increase, resulting in a decrease of 20 billion won.

In the secondary financial sector, insurance companies and specialized credit finance companies saw slight increases, but mutual finance and savings banks mainly decreased by 1.4 trillion won. This is a slowdown in the decline compared to the previous month’s 2.2 trillion won decrease. Authorities explained, "The slowdown in the decline of the secondary financial sector is mainly due to an increase in card loans from credit finance companies and a reduced decrease in mortgage loans from mutual finance."

Within the financial sector, it is observed that loan demand is increasing as the sharp decline in the real estate market eases. However, attention is also being paid to the impact of reverse jeonse, which is expected to intensify in the second half of the year. An industry insider said, "Since the government is preparing to ease the Debt Service Ratio (DSR) regulations related to jeonse eviction loans, related loans may increase. However, if a significant amount of properties flood the market due to reverse jeonse, this trend could change, so it is necessary to closely monitor the situation."

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