Household loans from the five major commercial banks increased by about 4.6 trillion won this month. Including savings banks and card companies, the total increase in household loans across all financial sectors is projected to approach 6 trillion won. With a surge in 'last-minute demand' ahead of the planned reduction in housing loan limits in July and a likely interest rate cut, the growth rate of household loans is expected to accelerate further.
According to financial sources on the 27th, the outstanding balance of household loans from the five major banks, including KB, Shinhan, Hana, Woori, and NH Nonghyup, stood at 747 trillion 7033 billion won as of the 26th, reflecting an increase of 4 trillion 6185 billion won compared to the end of last month (743 trillion 848 billion won). The outstanding balance of household loans at the five major banks decreased by about 500 billion won in January, but increased by 3 trillion 931 billion won, 1 trillion 7992 billion won, and 3 trillion 7742 billion won in February, March, and April, respectively, and has surged this month.
The increase in household loans is influenced by the rising number of housing transactions. Analysis suggests that the surge in housing transactions following the lifting of the land transaction permit system in February is now being reflected in housing loans with a time lag. Generally, loan approvals occur one or two months after the conclusion of a housing sales contract. There is also considerable demand to secure loans to buy homes before the implementation of the three-tiered debt service ratio (DSR) in July. Once the three-tiered DSR is implemented, workers earning 100 million won annually will see their loan limits reduced by about 30 million won.
A representative from a commercial bank noted, "There was active housing transaction activity in March, and related housing loans began to be issued last month, which led to an increase in household loans," adding, "There has also been a significant rise in demand for housing loans before stricter lending regulations are enforced."
Credit loans are also on the rise. The outstanding balance of credit loans at the five major banks was 103 trillion 4799 billion won as of the 26th, an increase of 9868 billion won compared to the end of last month (102 trillion 4931 billion won). Credit loans had decreased for four consecutive months from December last year to March this year, but surged by 1.1 trillion won last month, reversing the trend. Amid stock market volatility, there has been an increase in investors who view it as an opportunity for bottom-fishing, and funds have flowed into public offering subscriptions, leading to a spike in credit loans. The increase in credit loans is expected to be even larger this month, as promising public offerings are scheduled for this week, suggesting a higher likelihood of further increases in credit loans.
The possibility of a cut in the Bank of Korea's benchmark interest rate is also stimulating loan demand. The Bank of Korea is set to hold a Monetary Policy Committee meeting on the 29th to determine whether to lower the benchmark interest rate, and the market predicts a significant likelihood that the Bank of Korea will reduce the rate by 0.25 percentage points to stimulate the economy. A representative of the financial authorities said, "We are enhancing daily and regional monitoring of household loans and are keeping a close watch on household loan trends."