Household loans from the banking sector have increased for two consecutive months, but the growth rate has decreased. This is attributed to a slowdown in housing transactions following the end of the new school year moving season. However, with the lifting of the land transaction permit system last month and the subsequent reassignment process, the volume of housing transactions has increased, suggesting that household loans may see an expanded growth rate in the future.
According to the 'Financial Market Trends' announced by the Bank of Korea on the 9th, household loans from the banking sector amounted to 1,145 trillion won, an increase of 14 trillion won compared to the previous month. Household loans have increased for the second month in a row, following February (+34 trillion won), but the growth rate has diminished.
Mortgage loans recorded 909 trillion 900 billion won, an increase of 22 trillion won compared to the previous month. Mortgage loans have been on the rise since March 2023 (+23 trillion won). However, the growth rate has decreased from January (+34 trillion won). Jeonse (key money deposit) loans also saw a modest increase of 7 trillion won compared to the previous month, indicating a slowdown from February (+14 trillion won).
The Bank of Korea explained that the slowdown in housing transactions at the end of last year and early this year, as well as the resolution of moving demand for the new school year, contributed to the reduced growth rate. According to the Ministry of Land, Infrastructure and Transport, the volume of apartment sales transactions slightly decreased from 27,000 cases in December last year to 26,000 cases in January this year.
However, it appears the growth rate of mortgage loans will expand in the future. This is due to the fact that the land transaction permit system for the three districts of Gangnam (Gangnam-gu, Seocho-gu, Songpa-gu) was lifted and the volume of housing transactions increased during the process of reassignment. In fact, the volume of apartment sales transactions in Seoul surged from 3,200 cases in January to 6,000 cases in February.
Vice Administrator Park Min-cheol noted, 'The effect of the increase in housing transaction volume during February and March following the lifting of the Seoul land transaction permit system has not yet been reflected in household loans,' adding, 'This effect is expected to manifest significantly during the second quarter.'
Other loans, which include general unsecured loans, have experienced a smaller decline. Last month, the balance of other loans totaled 234 trillion 200 billion won, a decrease of 9 trillion won from the previous month. This decline was larger than that seen in February (-2 trillion won). Other loans had been increasing from October to November last year but switched to a downward trend starting in December.
Corporate loans from the banking sector have decreased by 21 trillion won compared to the previous month, totaling 1,324 trillion 300 billion won. Corporate loans had been increasing for two consecutive months since January (+78 trillion won) but have now decreased after three months.
Looking at it by company size, large corporation loans (+4 trillion won → -7 trillion won) decreased mainly due to temporary repayments for financial ratio management at the end of the quarter. Small and medium-sized enterprise loans (+31 trillion won → -14 trillion won) decreased amid a continued slowdown in loan demand, alongside strengthened credit risk management by major banks and actions related to bad debt sales and write-offs.
Last month, bank deposits increased by 12 trillion 300 billion won to 2,438 trillion 400 billion won, while the deposits of asset management companies decreased by 13 trillion 100 billion won to 1,106 trillion 300 billion won. Bank deposits increased mainly due to demand deposit accounts, while asset management company deposits declined, particularly in money market funds (MMF).