South Korean banks reported household loans increased 7.6 trillion won month-over-month in June, marking the largest expansion in 22 months since August 2024. The growth was driven by mortgage loans rising 4.3 trillion won amid increased housing transactions in the Seoul metropolitan area, while other loans grew 3.3 trillion won primarily through credit loans tied to stock investments. According to the Bank of Korea's June Financial Market Trends report released on July 9, total household loan balances reached 1,189.4 trillion won at end-June, with banks approaching their annual loan management targets.
Mortgage Loans Rise 4.3 Trillion Won on Housing Demand
Mortgage loans increased 4.3 trillion won month-over-month in June. Despite continued declines in jeonse (deposit-based rental) loans, the increase expanded due to housing transaction volume growth in the Seoul metropolitan area during April-May and mid-term payment demands for pre-sold properties. Total mortgage loan balances reached 945 trillion won at end-June.
Park Min-cheol, Deputy Director of the Bank of Korea's Market Overview Team, stated that Seoul and major Gyeonggi areas are experiencing price increases exceeding 10% on an annualized basis due to supply concerns, with housing transaction volumes surpassing long-term averages.
Other Loans Increase 3.3 Trillion Won Amid Stock Investment
Other loans grew 3.3 trillion won in June, primarily through credit loans as individual stock investment expanded. The increase occurred despite quarter-end write-offs and sales of non-performing loans. Other loan balances totaled 243.5 trillion won at end-June.
Household loan increases from March to June showed consecutive expansion: 500 billion won, 2.1 trillion won, 6.9 trillion won, and 7.6 trillion won respectively.
Banks Approach Annual Loan Management Targets
Park stated that banks' current loan levels are "considerably close to this year's household loan management targets." Some banks have introduced mortgage loan limit reductions as self-imposed measures to meet their loan management objectives.
Regarding household loan management, Park noted that banks are expected to introduce management measures independently to meet their targets.
Corporate Loans Grow 5.1 Trillion Won in June
Corporate loans increased 5.1 trillion won in June, a reduced pace compared to the previous month's 10.6 trillion won increase. The slowdown was attributed to seasonal factors including fiscal ratio management at half-year end.
Corporate bonds recorded net redemptions of 2.9 trillion won due to companies' issuance burden from rising interest rates. Net redemptions continued throughout the year, totaling 14.4 trillion won in the first half. Commercial paper and short-term bonds also saw net redemptions of 1.7 trillion won.
Bank Deposits Increase 28.8 Trillion Won
Bank deposits increased 28.8 trillion won in June, with both demand deposits rising 12.2 trillion won and time deposits growing 14.2 trillion won.
Asset management company deposits shifted to a decrease of 11.7 trillion won, centered on money market funds (MMFs). MMFs reversed to a 29.3 trillion won decrease due to corporate and government fund outflows at half-year end. Bond funds turned to a 4.8 trillion won decrease, while equity fund increases sharply declined to 3.5 trillion won from the previous month's 58.8 trillion won. Other funds increased 15.5 trillion won.
FAQ
What was the size of South Korean household loan increase in June?
South Korean banks reported household loans increased 7.6 trillion won month-over-month in June, the largest expansion in 22 months since August 2024's 9.2 trillion won increase. Total household loan balances reached 1,189.4 trillion won at end-June.
Why did mortgage loans increase in June?
Mortgage loans rose 4.3 trillion won in June due to increased housing transaction volumes in the Seoul metropolitan area during April-May and mid-term payment demands for pre-sold properties, according to the Bank of Korea's June Financial Market Trends report.
