Last month, household loans in the banking sector surged by more than 6 trillion won. The sharp increase in housing transactions, which occurred during the process of lifting and then reassigning land transaction permission areas, was reflected in the loan performance with a delay. The Bank of Korea expects the growth of household loans to continue until August.
According to the ‘June Financial Market Trends’ announced by the Bank of Korea on the 9th, as of the end of last month, the balance of household loans (including policy mortgage loans) at deposit banks increased by 6.2 trillion won compared to the end of the previous month, totaling 1,161.5 trillion won. The increase was 1 trillion won larger than in May (+5.2 trillion won) and was the largest since August of last year (+9.2 trillion won).
The increase in household mortgage loans was significantly influenced by the rise in housing transactions as the land transaction permission system was lifted and then expanded. As of the end of last month, household mortgage loans totaled 923.1 trillion won, an increase of 5.1 trillion won compared to the previous month. The growth in household mortgage loans has been increasing from 2.5 trillion won in March, 3.7 trillion won in April, and 4.1 trillion won in May.
Other loans also contributed to the increase, rising by more than 1 trillion won. As of the end of last month, other loans amounted to 237.4 trillion won, an increase of 1.1 trillion won from the previous month. Other loans decreased from December of last year (-1.1 trillion won) to March of this year (-900 billion won), but have shown a continuous increase for three consecutive months since April (+1 trillion won).
Park Min-cheol, Vice Administrator of the Bank of Korea’s Market Total Control Team, noted, ‘The increase in housing transactions in February and March impacted household mortgage loans with a lag,’ adding, ‘As the demand for funds for stock investments and living expenses increased more than expected, other loans also rose to a level similar to last month.’
Regarding the future flow of household loans, he said, ‘Considering that housing transactions increased during May and June before the introduction of the 6·27 household debt management plan, household loans are expected to expand until July and August.’
Last month, corporate loans at banks totaled 1,343 trillion won, a decrease of 3.6 trillion won from the previous month. This was the first decline in three months since March (-2.1 trillion won). Loans to large corporations decreased by 3.7 trillion won, while loans to small and medium-sized enterprises increased by 1 billion won. The significant drop in corporate loans was attributed to temporary repayments for managing financial ratios at the end of the half-year and repayments of credit limits by some large corporations.
Deposits increased by 27.3 trillion won last month, totaling 2,460 trillion won at deposit banks. The previous month saw an increase of 20.2 trillion won, indicating a larger increase. Time deposits surged by 38.4 trillion won due to the inflow of corporate funds for managing financial ratios at the end of the half-year, driving the overall rise in deposits.
The inflow of assets under management decreased by 25 trillion won, marking a larger outflow compared to the previous month (-13 trillion won). Money market funds (MMF) saw a significant drop of 205 trillion won due to capital outflows for managing financial ratios at the end of the quarter. However, equity funds increased by 70 trillion won and other funds by 95 trillion won, limiting the extent of the decrease.