In the first quarter of this year, household debt in South Korea rose by nearly 3 trillion won, setting a record high.

According to the Korea Bank's 'Household Credit (provisional)' statistics announced on the 20th, as of the end of March, the household credit balance was recorded at 1,928 trillion 700 billion won, an increase of 2.8 trillion won compared to the end of last year.

Notice at a loan window of a commercial bank in Seoul on the 20th. /News1

Household credit decreased by 3.1 trillion won in the first quarter of last year, marking a decline for the first time in four quarters since the first quarter of 2023 (-14.5 trillion won), but it turned back to an increase in the second quarter (+13.4 trillion won) and has been on an increasing trend for four consecutive quarters. However, the increase was reduced to a quarter of the level of the previous fourth quarter (+11.6 trillion won).

Household credit refers to the comprehensive debt that includes loans (household loans) and credit card usage (sales credit) received by households from financial institutions such as banks and insurance companies. Household loans mean loans taken by households for living and side jobs, while sales credit refers to transactions made on credit through credit cards and installment finance companies.

Excluding sales credit (credit card payments), the household loan balance at the end of the first quarter was recorded at 1,810 trillion 300 billion won, an increase of 4.7 trillion won from the end of the previous quarter (1,805 trillion 500 billion won). The increase was reduced to half compared to the previous quarter (+9.1 trillion won).

The housing mortgage loans, which account for 60% of household loans (balance 1,133 trillion won), increased by 9.7 trillion won, leading the upward trend. Conversely, other loans such as credit loans (balance 676 trillion 700 billion won) decreased by 4.9 trillion won, marking a decline for 14 consecutive quarters. The decrease in other loans was attributed to borrowers repaying credit loans with year-end bonuses.

By loan windows, household loans from deposit banks (balance 974 trillion 500 billion won) increased by 8.4 trillion won over three months. Household loans from non-bank deposit-taking institutions such as mutual finance, mutual savings banks, and credit cooperatives (balance 311 trillion 300 billion won) increased by 1 trillion won, while household loans from other financial institutions such as insurance, securities, and asset-backed companies (balance 524 trillion 500 billion won) decreased by 4.7 trillion won.

Kim Min-soo, head of the Financial Statistics Team at the Bank of Korea, noted that "the increase in housing transactions in February and March is affecting housing mortgage loans with a lag of 1 to 3 months," adding, "While housing mortgage loans may temporarily increase in May and June, it is expected to stabilize in the second half due to the reassignment of land transaction approval areas and the three-stage stress debt service ratio (DSR) regulation."

Regarding the household debt ratio to the gross domestic product (GDP), he evaluated that "the nominal GDP for the first quarter has yet to be announced, but considering that household credit increased by 0.1% compared to the previous quarter, the downward trend of the household debt ratio will likely continue."

In the first quarter, sales credit (balance 118 trillion 500 billion won) decreased by 1.9 trillion won, mainly among credit card companies and other credit-financing companies. According to the Bank of Korea, it is generally observed that sales credit and credit card usage increase during the fourth quarter due to year-end consumer spending and tend to decrease in the first quarter due to base effects.