Household Debt in Q3 Rises by 14.3 Trillion Won... Largest Increase Since Q4 2021

Household Credit Balance 1,875.6 Trillion Won
Continued Increase in Mortgage Loans Impact

In the third quarter of this year, the scale of household credit (debt) in South Korea increased by as much as 14.3 trillion won, marking the largest increase since the fourth quarter of 2021. This was due to a continued rise in housing mortgage loans (jumdae) as demand for funds related to housing sales increased.

According to the 'Household Credit (Preliminary)' data released by the Bank of Korea on the 21st, the balance of household credit at the end of the third quarter of this year was 1,875.6 trillion won, an increase of 14.3 trillion won compared to the end of the previous quarter.

Household credit had consecutively decreased in the fourth quarter of last year (-3.6 trillion won) and the first quarter of this year (-14.4 trillion won), but it turned to increase again after three quarters by rising 8.2 trillion won in the second quarter, and the increase expanded further in the third quarter.

The balance of household loans, which accounts for most of household credit, was 1,759.1 trillion won, up 11.7 trillion won from the end of the previous quarter. Although the decrease in other loans slightly expanded, the increase in jumdae was larger.

The increase in jumdae rose sharply from 4.4 trillion won in the first quarter to 14.1 trillion won in the second quarter, reaching 17.3 trillion won in the third quarter.

Seo Jeong-seok, head of the Financial Statistics Team at the Bank of Korea, explained, "As demand for funds related to housing sales increased, the increase expanded mainly in policy mortgages such as special Bogeumjari loans and individual housing mortgage loans." Nationwide housing sales transactions were 155,000 units in the second quarter, more than 119,000 units in the first quarter, and recorded 149,000 units in the third quarter.

The decrease in other loans expanded from 5.4 trillion won to 5.5 trillion won in the second quarter. Due to contraction in credit loans and non-residential real estate mortgage loans, the decline continued for eight consecutive quarters.

By institution, loans from deposit banks increased by 10 trillion won for two consecutive months, and the decrease in non-bank deposit-taking institutions narrowed due to a slowdown in the decline of jumdae and non-residential real estate mortgage loans. The increase in other financial institutions, etc. (6.5 trillion won) narrowed as housing and urban fund jumdae and securities company loans turned to decrease compared to the previous quarter.

Sales credit turned to increase by 2.6 trillion won compared to the previous quarter, supported by increased demand for travel and leisure, which expanded credit card usage.

Regarding the outlook for household loans, Team Leader Seo said, "Due to the recent burden of jumdae increase, a wait-and-see attitude is spreading in the housing market," and added, "I expect household loan management measures to become visible with a time lag."

He continued, "Sales credit turned to increase at the end of the third quarter, with credit card companies' card usage expanding due to increased traveler demand, rising by 2.6 trillion won," and explained, "Sales credit, which had been a decreasing factor, rebounded after three quarters."

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