Bank Household Loans Rise by 4.1 Trillion Won in August... "Pre-June 27 Transactions to Impact Until October"

Bank of Korea "Financial Market Trends in August 2025"
Outstanding Bank Household Loans Reach 1,168.3 Trillion Won... Mortgage Loans Up 3.9 Trillion Won
Surge in Housing Transactions in May and June Continues to Impact Loans with a 2-4 Month Lag

In August, bank household loans increased by 4.1 trillion won, with the scale of growth expanding compared to the previous month. This is the result of increased housing transactions before the June 27 household loan regulations, which affected household loans with a time lag. The surge in housing transactions in May and June is expected to continue impacting the growth of household loans for two to four months, possibly until October.

Yonhap News Agency

According to the "Financial Market Trends in August 2025" released by the Bank of Korea on September 10, the outstanding balance of bank household loans at the end of last month was 1,168.3 trillion won, up 4.1 trillion won from the end of the previous month. The scale of the increase expanded significantly compared to the previous month’s 2.7 trillion won.

The biggest driver of the increase in bank household loans was mortgage loans. Last month, mortgage loans grew by 3.9 trillion won, reaching 930.3 trillion won, a slight increase from July’s 3.4 trillion won. This was due to the delayed impact of increased housing transactions in May and June, which led to a rise in mortgage loans for home purchases. According to the Ministry of Land, Infrastructure and Transport, the number of apartment sales in Seoul rose to 7,300 in May and 10,900 in June. However, after the June 27 regulations, the real estate market entered a wait-and-see mode, and the number of transactions in July dropped to 3,900.

Park Mincheol, head of the Market Management Team at the Bank of Korea’s Financial Markets Department, said, “Household loans across the entire financial sector, including banks, increased by 4.7 trillion won in August, mainly due to housing-related loans, marking a significant expansion from the previous month. Considering the surge in housing transactions over the past few months, this was within expectations.” Regarding the future trend of household loans, he noted, “The impact of housing transactions on household loans typically concentrates within two to four months. By simple calculation, the increase in transactions in May and June could continue to affect household loan growth through August to October.”

Park also commented on the effects of the September 7 measures, which focus on expanding housing supply and additional household loan regulations, saying, “It is still too early to assess the effectiveness of these measures, so we need to observe for some time. However, considering that recent instability in the housing market stems from a lack of supply, these measures are expected to help alleviate market anxiety. Ensuring that housing supply proceeds without setbacks will be crucial.”

Jeonse deposit loans, which are included in mortgage loans, increased by 400 billion won from the end of the previous month. Other loans, including general credit loans, credit line loans (overdraft accounts), commercial real estate-backed loans, deposit-backed loans, and stock-backed loans, increased by 300 billion won, reversing the previous month’s decline. However, Park explained, “This was due to the resumption of non-face-to-face loans, which had been temporarily suspended. Due to the reduction in credit loan limits following the June 27 regulations, the increase was limited. Across the entire financial sector, the overall trend is still a net decrease.”

Corporate loans increased for both small and medium-sized enterprises (SMEs) and large corporations, with the scale of growth expanding. At the end of last month, the outstanding balance of bank corporate loans stood at 1,354.8 trillion won, up 8.4 trillion won from the previous month. Loans to large corporations increased by 3.8 trillion won, with some companies expanding borrowing for debt repayment and securing operating funds, leading to a much larger increase than the previous month’s 500 billion won. SME loans rose by 4.5 trillion won, mainly driven by major banks expanding their lending operations and increased facility funding for small corporations. Park explained, “Banks increased their handling of corporate loans, and this coincided with increased funding demand from companies, resulting in a significant expansion of loans.”

However, Park predicted that the future trend of corporate loans would differ between supply and demand sides. He said, “As banks strengthen their management of household loans, they are relatively expanding their corporate lending operations, and the easing of capital ratio management burdens in the first half of the year will also increase banks’ capacity for corporate loans going forward. On the demand side, although some uncertainties regarding tariffs have eased, uncertainties in business conditions remain in the detailed negotiation process, so it will be difficult for corporate funding demand to recover significantly in the near term.”

Bank deposits in August turned to an increase, rising by 32.9 trillion won from the end of the previous month, mainly driven by demand deposits. Demand deposits, which had decreased by 24.2 trillion won in the previous month, increased by 18.1 trillion won in just one month due to the inflow of local government fiscal execution funds such as grants. Time deposits increased by 12.2 trillion won, driven by temporary deposits of local government funds and efforts by some banks to attract deposits for loan-to-deposit ratio management.

Asset management company deposits continued to grow, rising by 15.7 trillion won from the end of the previous month, but the scale of growth was smaller than the previous month’s 46.6 trillion won. Money Market Funds (MMFs) increased by only 1 trillion won as corporate funds withdrew due to reduced yield advantages. Bond funds and equity funds continued to see inflows, increasing by 6.8 trillion won and 2.2 trillion won, respectively, but the pace of growth slowed compared to the previous month. In contrast, other funds expanded their inflows by 4.9 trillion won.

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