After the announcement of the June 27 household loan regulations, unsecured loans, which had slowed, began to grow again in September. The domestic stock market has been hitting record highs day after day, which is seen as driving an increase in borrowing to invest with debt. By contrast, the increase in mortgage loans, which surged by nearly 6 trillion won in June, shrank to one-tenth.
According to the financial sector on the 25th, the outstanding balance of unsecured loans at the five major banks—KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup—was 104.3019 trillion won as of the previous day, up 222.9 billion won from the end of last month (104.0790 trillion won). Unsecured loans jumped by more than 1 trillion won in June, but the increase shrank sharply in July (-433.4 billion won) and August (110.3 billion won) after the June 27 regulations were announced. The government included in the regulations a measure to cap unsecured loan limits within each financial consumer's annual income.
A bank official said, "It appears that the rise in the number of people borrowing money to invest in stocks also affected the increase in unsecured loans." The balance of "margin loans," the amount borrowed from securities firms to buy stocks that has not yet been repaid, also swelled to a record high. According to the Korea Financial Investment Association, as of the previous day the margin loan balance was 23.3643 trillion won, the highest since data collection began on July 1, 1998.
Behind the renewed rise in unsecured loans is a booming stock market. The Korea Composite Stock Price Index (KOSPI) has been breaking record highs day after day. There are also projections that the KOSPI will top 4,000 this year.
In contrast, mortgage loans have slowed sharply this month. That's because mortgage applications plunged after the June 27 regulatory announcement. Mortgages typically take about one to two months from application to execution, creating a lag. As of the previous day, the outstanding mortgage balance at the five major banks was 608.2367 trillion won, up only 565.3 billion won from the end of last month (607.6714 trillion won). Mortgage balances at the five major banks rose by 5.7634 trillion won in June, 4.5452 trillion won in July, and 3.7012 trillion won in August.
However, while mortgages have decreased, home prices have been slow to come down. Despite the Sept. 7 housing supply plan announcement, Seoul home prices are showing a clear upward trend. As a result, there are predictions that the government could roll out additional regulatory measures, such as expanding land transaction permit zones and tightening lending rules. A financial authority official said, "If necessary, we will implement additional lending regulations without delay," adding, "We are closely monitoring home price trends and the pace of household loan growth."