Despite Lending Regulations, Mortgage Loans Surge by 5.5 Trillion Won in April... Largest Increase in 8 Months

Overall Household Loan Growth Remains Steady Compared to Previous Month

Government Vows "Strong Oversight of Business Loan Misuse"

The increase in housing mortgage loans in the financial sector has reached its highest level in eight months. This surge is interpreted as being driven by preemptive demand from borrowers seeking to secure funds in advance of the government's tightening of lending regulations.

Mortgage Loan Growth Hits Eight-Month High

ATM of major commercial banks installed in Yongsan-gu, Seoul on the 25th. Photo by Jin-Hyung Kang aymsdream@

According to the "April Household Loan Trends and Household Debt Monitoring Meeting" materials released by the Financial Services Commission and the Financial Supervisory Service on May 17, household loans increased by 3.5 trillion won last month compared to the previous month. This is the same increase as recorded in the previous month. Household loans, which had decreased by 1.2 trillion won in December last year, have been on the rise for four consecutive months since turning to an increase in January this year.

By category, housing mortgage loans increased by 5.5 trillion won, nearly double the previous month's increase of 3 trillion won. This level of growth is the largest since August 2025, when it reached 5.8 trillion won.

In particular, mortgage loans from the banking sector increased by 2.7 trillion won compared to the previous month. In March, there was a 200 billion won decrease compared to the previous month, but the figure rebounded in April. Bank-originated mortgage loans increased by 1.3 trillion won, policy-based loans such as Didimdol and Butimok loans increased by 1 trillion won, and Bogeumjari loans and others increased by 400 billion won. Mortgage loans from the secondary financial sector increased by 2.8 trillion won, which is a smaller increase compared to the previous month's 3 trillion won.

On the other hand, other loans decreased by 2 trillion won, reversing the previous month's trend of a 500 billion won increase. This was mainly due to an 800 billion won decrease in credit loans, which is a larger decrease than the previous month's 200 billion won drop.

By type of financial institution, household loans from the banking sector increased by 2.2 trillion won, expanding more than four times compared to the previous month's 500 billion won. Household loans from the secondary financial sector increased by 1.3 trillion won, a smaller increase than the previous month's 3.1 trillion won. Mutual finance institutions saw a 2 trillion won increase, a slowdown compared to the previous month's 2.8 trillion won. Both insurance companies (down 400 billion won) and credit-specialized financial companies (down 200 billion won) turned to declines. However, savings banks saw their decrease in household loans shrink to 20 billion won, compared to a 400 billion won decrease in the previous month.

"Household Loans Remain Within Target for January–April"

Jinchang Shin, Secretary General of the Financial Services Commission. 2025.12.4 Photo by Jinhyung Kang

Previously, on May 14, the Financial Services Commission held a "Household Debt Monitoring Meeting" to focus discussions on ▲ total household debt management performance, ▲ trends in household loans across the financial sector last month, and ▲ the results of inspections regarding the misuse of business loans for purposes other than their stated intent, including illegal real estate activities.

Shin Jinchang, Secretary General of the Financial Services Commission, stated at the meeting that the increase in household loans is in line with the target, saying, "The trend in household loan growth from January to April is being stably managed within the annual management target range."

Regarding the sharp increase in bank-originated mortgage loans, he noted, "Potential risk factors still exist." According to the Ministry of Land, Infrastructure and Transport, the number of nationwide housing transactions in March was 72,000 units, a 24% increase from the previous month's 58,000 units. Apartment transactions in the Seoul metropolitan area in March were 27,000 units, up 22.7% from 22,000 units in the previous month. The Financial Services Commission explained that the volume of transactions in March surged compared to January and February, resulting in a natural increase in bank-originated mortgage loans.

Secretary General Shin stated, "We plan to thoroughly manage mortgage loans to ensure they do not stimulate the housing market, by strengthening monitoring of compliance with the newly established separate management targets for bank-originated mortgage loans this year." He added, "Since May may see an increase in household loan demand due to factors such as Family Month, all financial institutions must remain alert and do their utmost to ensure the stable management of household debt."

"Strong Oversight of Illegal Real Estate Activities"

The Financial Services Commission also announced that, together with the Financial Supervisory Service and financial institutions, it identified a total of 127 cases of business loans being misused for purposes other than intended across the financial sector in the second half of last year. During the first half of this year, the commission plans to revise inspection standards for each financial sector, extending the period during which new loans are prohibited to three years for a first offense and ten years for a second offense. For individual business owners, restrictions on new household loans will also be applied in addition to business loan restrictions, as part of a crackdown on unlawful or expedient lending practices.

Secretary General Shin emphasized, "Although the trend of household debt stabilizing at a lower level continues, incentives still exist for borrowers to circumvent lending regulations for home purchases. We will continue to enforce strong management policies to eradicate illegal activities related to real estate, such as the misuse of business loans."

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