As real estate financing loans hit an all-time high, the scale of non-bank financial sector defaults is soaring. Concerns are rising that if the real estate market freezes, another financial crisis could occur.
According to data submitted by the Bank of Korea to the National Assembly's Planning and Finance Committee member Park Seong-hoon on the 29th, the total outstanding real estate loans in the banking and non-banking sectors for the third quarter of this year amounted to 512.3 trillion won, an increase of 19.3 trillion won compared to the third quarter of last year (493 trillion won). This is the highest level since the Bank of Korea began collecting related statistics in 2015. The outstanding loan balance in the banking sector (325.2 trillion won) is also a record high.
In contrast, the outstanding loans for the construction sector in the financial sector stood at 114.5 trillion won in the third quarter, down 1.9 trillion won from the second quarter (116.4 trillion won) and down 1.2 trillion won from a year ago (115.7 trillion won).
The problem is that the scale of defaults is increasing, particularly in the non-bank financial sector. The arrears ratio for non-bank loans in the construction and real estate sectors was 8.94% and 6.85%, respectively, for the third quarter, the highest since statistics were collected. This represents an increase of 4.13 percentage points and 2.85 percentage points compared to the third quarter of last year.
The ratio of non-performing loans in the non-bank construction and real estate sectors (with arrears over 3 months) has also surged to 24% and 20.38%, respectively. Notably, the real estate sector soared by 14.42 percentage points in just one year, setting a new record, while construction saw an increase of 16.69 percentage points compared to the third quarter of last year (7.31%).