Combined household loans from the five major banks surged by more than 3.6 trillion won ($2.6 billion) this month despite financial authorities’ ongoing efforts to curb the growth of household debt, according to industry officials, Sunday.
Analysts attributed the rise to falling market interest rates that resulted in an increase in real estate transactions.
The Financial Services Commission’s (FSC) decision made at the end of June to postpone by two months the tightening of household loan limits, which was originally scheduled for July 1, has also contributed to increasing demand for the loans.
The total household loan balance of the five major banks — KB Kookmin Bank, Shinhan Bank, Hana Bank, Woori Bank and NongHyup 한국을 Bank — amounted to 712.18 trillion won as of Thursday, up approximately 3.61 trillion won from 708.57 trillion won tallied at the end of June.
Household loans from the five lenders surged by 5.34 trillion won in June alone, led by a rise in mortgage loans. This marked the biggest monthly increase since July 2021.
The outstanding household loans of all financial institutions of the country came to 1,115.5 trillion won ($808 billion) in that month, up 6 trillion won from a month earlier.
In response to the rising household debt, the financial authorities have been working to tighten lending regulations gradually by implementing the stressed debt service ratio (DSR) rules.