Last month, the total household loan in the financial sector increased by 400 billion won compared to the previous month. In contrast to February, when household loans surged by 4.2 trillion won in a single month, the increase has significantly decreased.
The financial authorities evaluated that housing mortgage loans have shown a stable trend in March. However, they noted that from April to May, housing transactions prior to the reassignment of land transaction permission zones may be reflected with a lag, which could lead to a significant increase in housing mortgage loans, necessitating close management and supervision.
According to the ‘March 2025 household loan trends (provisional)’ data distributed by the Financial Services Commission and the Financial Supervisory Service on the 9th, household loans in the financial sector recorded an increase of 400 billion won last month. Household loans typically decrease in March because financial companies, including banks, massively sell and purchase non-performing loans at the end of the first quarter, resulting in a decline in the total volume of household loans. Compared to March 2022 (-3.6 trillion won), March 2023 (-5.1 trillion won), and March 2024 (-4.9 trillion won), this is unusual.
Housing mortgage loans increased by 3.4 trillion won over the month of March. Banks’ housing mortgage loans rose by 2.2 trillion won, while the second financial sector's housing mortgage loans increased by 1.1 trillion won. Compared to February, when banks and the second financial sector's housing mortgage loans increased by 3.4 trillion won and 1.5 trillion won respectively, the rate of increase has diminished. Other loans, including credit loans, decreased by 3 trillion won.
Bank household loans increased by 1.4 trillion won. Bank housing mortgage loans are divided into bank's own products and policy lending products such as Didirin and Bertimok, with bank's own loans increasing by 700 billion won and policy loans increasing by 1.5 trillion won. In February, bank's own loans increased by 600 billion won, while policy loans rose by 2.8 trillion won.
Household loans from the second financial sector decreased by 1 trillion won, marking a shift to a downward trend. Mutual finance (300 billion won) saw a reduced rate of increase compared to the previous month. Credit finance companies (-900 billion won) transitioned to a decreasing trend, and insurance (-100 billion won) showed little change in the rate of decline compared to the previous month.
On that day, the financial authorities held a ‘household debt inspection meeting’ chaired by Secretary-General Kwon Daeyoung to review the household debt trends for March. Attending the meeting were officials from the Ministry of Economy and Finance, Ministry of Land, Infrastructure and Transport, Bank of Korea, Financial Supervisory Service, and representatives from the Korean Bankers Association and five major banks.
Secretary-General Kwon noted, “While household loans are showing a stable appearance, housing transactions that were actively conducted before the reimplementation of real estate regulations in March will be reflected in household debt statistics with some delay, so the period after April will become a significant turning point in future household loan management.” He continued, “We will closely examine whether there are any balloon effects in areas not designated as land transaction permission zones in collaboration with relevant agencies such as the Ministry of Land, Infrastructure, and Transport and strengthen regional household loan monitoring with the financial sector.”
The financial authorities also reviewed the readiness of the financial sector ahead of the Financial Security Corporation's (HUG) reduction of the jeonse loan guarantee ratio in May (100% → 90%), strengthened income assessment in June, and the implementation of the three-step stress DSR (debt service ratio) in July.