Last month, the total household loans in the financial sector surged by about 5 trillion won. The increase in housing transactions due to the interest rate cuts and the partial lifting of the land transaction permission zones in Seoul, combined with heightened volatility in domestic and international stock markets, led to active "debt investment".
According to financial authorities and the financial sector, as of the 29th of last month, the total household loan balance in the financial sector increased by more than 5 trillion won compared to the end of March. Household loans in the financial sector increased by 4.2 trillion won in February and 400 billion won in March.
Last month, the increase in household loans was led by the banks. The household loan balance of the five major banks, including KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup, stood at 742.3253 trillion won as of the 29th, which is 3.7742 trillion won more than at the end of March (738.5511 trillion won). Although the loan performance for the last business day (April 30th) has not yet been tallied, it marks the largest increase in seven months since September of last year (5.6 trillion won).
The increase in household loans at the five major banks soared to 9.6259 trillion won in August of last year, but since September, it has consistently declined due to interest rate hikes and the total household loan regulations imposed by authorities and banks. However, the beginning of this year saw a decrease in interest rates, relaxation of loan regulations by banks, and increased demand during the moving season, leading to rebounds in February (3.0931 trillion won) and subsequent increases in March (1.7992 trillion won) and April, marking three consecutive months of growth.
The balance of mortgage loans (including Jeonse loans) amounted to 588.3878 trillion won, an increase of 2.7073 trillion won compared to the end of March (585.6805 trillion won). This increase is larger than in March (2.3198 trillion won) but about 700 billion won less than in February (3.3836 trillion won). Credit loans also rose from 101.6063 trillion won to 102.7109 trillion won, an increase of 1.1046 trillion won, marking a transition back to growth after five months since November of last year (244.2 billion won).
A spokesperson from a commercial bank noted, "The increase in housing transactions in the Seoul area following the lifting of land transaction permission zones in February has led to an increase in mortgage loans with a several-month delay, and amid rapid declines in domestic and international stocks due to U.S. tariff policies, the demand for investment-related credit loans such as overdraft loans has surged." Another spokesperson from a different commercial bank remarked, "Generally, many cases set the final loan payment date at the end of the month, so when the loan handling amounts are tallied up to April 30th, the increase in mortgage loans last month could be even larger."
Financial authorities recently assessed that the increase in household loans is at a manageable level, but they plan to continue strengthening the management of household debt.