As last month's Oct. 15 real estate curbs effectively shut down gap investing (buying dwellings with jeonse), jeonse listings have become scarce, and related loans appear to be plunging. Along with this, the overall mortgage loan balance, including jeonse funds loans, also slowed to the lowest growth pace in a year.
According to the financial sector, the outstanding loan balance of the five major banks (Shinhan, Hana, Woori, NH Nonghyup, KB Kookmin) stands at 766.3718 trillion won, up 2.2769 trillion won this month alone. Although that is double the September balance increase, it is only one-third of June, when "yeongkkeul" (scraping together every last resource to buy dwellings) peaked. It is also smaller than in July and August.
In particular, the increase in mortgage loan balances was limited to 1.2683 trillion won. It fell short of the steep drop in September and was the smallest since Oct. last year. This trend is analyzed as the impact of the Oct. 15 property measures, which designated all of Seoul and key parts of the greater capital area as land transaction permit zones and further cut the loan limit for homes over 1.5 billion won to 200 million–400 million won. Among mortgage loans, jeonse funds loans fell by 538.5 billion won. This marked a second straight month of decline following September, and the drop was the largest since Apr. 2024, 1 year and 6 months ago.
In contrast to loans related to dwellings, the outstanding loan balance of unsecured loans rose from 103.8079 trillion won to 104.8598 trillion won in one month, an increase of 1.0519 trillion won. With successive curbs preventing financial consumers from adequately obtaining a mortgage loan, they appear to have tapped unsecured credit, including overdraft accounts, to the maximum.
As borrowing from banks continues to grow more difficult, the recent overall rise in the lending rate is adding to the burden on financial consumers. Market rates have climbed as uncertainty has grown over whether monetary easing, such as benchmark rate cuts by the Bank of Korea and the Federal Reserve (Fed), will continue.
As of the 31st of last month, the mortgage loan hybrid (fixed) rate at the four major banks—Shinhan, Hana, Woori, and KB Kookmin—based on 5-year bank bonds stood at an annual 3.690%–5.832%. This is attributed to the 5-year bank bond yield, a key indicator for hybrid rates, rising from 2.836% to 3.115%, up 0.279 percentage points over the same period. Compared with the end of Aug. (annual 3.460%–5.546%), the upper end rose 0.280 percentage points and the lower end 0.230 percentage points.
The unsecured loan rate (grade 1, one-year maturity) also rose from an annual 3.520%–4.990% to 3.610%–5.100%, with the upper end up 0.110 percentage points and the lower end up 0.090 percentage points. This too was because the one-year bank bond yield, a reference rate over the same period, rose by 0.187 percentage points. The banking sector observed that, with a rate cut by the Bank of Korea (BOK) this month uncertain amid unstable home prices, the rise in lending rates and the contraction in household loans' loan limit could persist for a considerable period.