Last Month, Bank Mortgage Loans Surge by 6.1 Trillion Won... Corporate Loans Also Rise by 11.3 Trillion Won 'Record High Increase'

BOK, September Financial Market Trends
"Household Loan Growth Expected to Accelerate in October"

Last month, bank mortgage loans increased by 6.1 trillion won, marking the second-largest increase ever recorded for the month of September. Bank corporate loans also surged by 11.3 trillion won in September, recording the largest increase since the statistical bulletin began in June 2009.

According to the "Financial Market Trends in September" released by the Bank of Korea on the 12th, the outstanding balance of household loans (including policy mortgage loans) at deposit banks stood at 1,079.8 trillion won as of the end of September, up 4.9 trillion won from the previous month. This broke the previous record again following last month.

Compared to the previous month, household loans at banks have continuously increased since April (+2.3 trillion won), with increases in May (+4.2 trillion won), June (+5.8 trillion won), July (+5.9 trillion won), August (+6.9 trillion won), and September (+4.9 trillion won). However, in September, the increase in mortgage loans slowed down and the decrease in other loans expanded, resulting in a smaller overall increase than the previous month.

September Bank Mortgage Loan Increase 'Second Largest Ever'

Bank mortgage loans in September rose by 6.1 trillion won from the previous month, marking the second-largest increase for September since the statistical bulletin began in June 2009. The largest increase was 6.7 trillion won in September 2020.

Yoon Ok-ja, Deputy Head of the Market General Team at the Bank of Korea, explained, "The increase in mortgage loans shrank from 7 trillion won to 6.1 trillion won last month due to fewer business days and tightened lending conditions in the financial sector. Other loans saw a larger decrease due to seasonal factors such as the inflow of holiday bonuses and write-offs of non-performing loans."

Bank corporate loans also increased by 11.3 trillion won in September, showing the largest increase for the month of September since the statistical bulletin began in June 2009. The previous record was 9.4 trillion won in September last year.

Loans to large corporations increased by 4.9 trillion won, mainly in the manufacturing sector, as corporate funding demand continued. This is the largest increase since January this year, when loans rose by 6.6 trillion won.

Loans to small and medium-sized enterprises (SMEs) increased by 6.4 trillion won, driven by banks' efforts to expand lending, seasonal factors such as corporate demand for Chuseok funds, and deferred loan repayments due to month-end holidays, mainly among small and medium-sized corporations.

Bank deposits continued to grow significantly, increasing by 27.1 trillion won in September following a 27.9 trillion won increase in August.

Demand deposits rose by 23.1 trillion won due to corporate fund inflows for managing financial ratios at the end of the quarter. On the other hand, time deposits decreased by 3.7 trillion won as some matured corporate funds were withdrawn despite continued net inflows of household funds.

"Household Loans Expected to Increase in October"…Impact of Housing Market and Government Loan Regulations

Regarding the outlook for household loans, Deputy Head Yoon said, "In October, the factors that slowed household loans in September, particularly other loans, will be resolved, so the increase is expected to be larger than in September. The autumn moving season effect may appear, and housing transactions expanded somewhat in August compared to July, which could lead to mortgage loan disbursements with a time lag." However, he added, "The government has taken several household loan management measures, such as suspending applications for the special Booming Housing Loan (Teukrye Bogeumjari Loan) general type and limiting 50-year mortgage loans, which could constrain the increase in household loans."

He continued, "Future household loan growth will be greatly influenced by the development of the housing market and government loan regulation measures. Although there is high uncertainty this year regarding the housing market and the direction of loan interest rates, it is important to consider that household loan increases typically expand in October and November compared to September, then shrink again in December due to seasonal low demand and the inflow of bonuses."

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