June Bank Household Loan Balance Hits Record High Due to Increase in Mortgage Loans

Housing Loan Debt Exceeds 7 Trillion Won... Largest Increase in 3 Years and 4 Months

Last month, the outstanding balance of household loans at banks surged, mainly driven by mortgage loans, reaching an all-time high.

According to the financial market trends for June announced by the Bank of Korea on the 12th, the outstanding balance of household loans at banks recorded a historic high of 1,062.3 trillion won.

The increase in household loans at banks last month was 5.9 trillion won, significantly higher than the 4.2 trillion won in April. This is the largest monthly increase since September 2021, when it rose by 6.4 trillion won.

Mortgage loans increased from 4.2 trillion won in May to 7 trillion won in June due to expanded demand for funds related to home purchases, an increase in move-in volumes, and a shift to increased jeonse (key money deposit) loan demand. This is the largest increase in three years and four months since February 2020, when mortgage loans rose by 7.8 trillion won.

Yoon Ok-ja, Deputy Head of the Market General Team at the Bank of Korea’s Financial Market Department, explained, "Housing transactions are increasing mainly in the Seoul metropolitan area, which is leading to a delayed increase in fund demand," adding, "As move-in volumes increased compared to the previous month, the demand for funds to cover remaining payments rose, and the demand for jeonse loans, which had been decreasing, turned slightly positive in June, also influencing the increase in mortgage loans."

Corporate loans at banks saw a reduced increase compared to the previous month due to seasonal factors at the end of the half-year. Corporate loans expanded by 7.5 trillion won in April and 7.8 trillion won in May, but increased by 5.5 trillion won in June. This is attributed to factors such as companies’ temporary loan repayments for financial ratio management and banks’ loan write-offs and sales for soundness management.

Loans to large corporations increased by 2.4 trillion won, showing a reduced growth rate compared to the previous month but still rising significantly compared to previous years due to demand for working capital. Loans to small and medium-sized enterprises (3.1 trillion won) steadily increased due to banks’ accommodative lending attitudes.

The Bank of Korea stated, "The 5.5 trillion won increase in corporate loans at banks in June is the second-largest June increase since the statistical flash report began in June 2009."

Bank deposits surged sharply from 8.2 trillion won in May to 38.4 trillion won in June.

Demand deposits increased by as much as 37.1 trillion won due to corporate fund inflows for financial ratio management at the end of the quarter.

Time deposits rose by 4.4 trillion won as household and corporate funds flowed in amid rising deposit interest rates.

Regarding the trends in July, Deputy Head Yoon said, "Housing transaction volumes themselves lead to loan executions with a time lag," adding, "Housing transactions increased in May as well, and this is having a delayed effect, so there is upward pressure on household loans."

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