In October this year, household loans across all financial sectors increased by 4.8 trillion won, widening from the previous month's increase (1.1 trillion won). Although the growth in mortgage loan balances narrowed due to successive lending regulations, other loans such as unsecured loans turned to an uptrend as "bit-too," or borrowing to invest, increased.
The Financial Services Commission (FSC) held a household debt review meeting at the Government Complex Seoul that day and stated accordingly. Among household loans, mortgage loans increased by 3.2 trillion won last month, narrowing slightly from the previous month's increase (3.5 trillion won). The increase in bank mortgage loans narrowed from 2.5 trillion won to 2.1 trillion won over the same period, while the second-tier financial sector maintained an increase of 1.1 trillion won.
Other loans increased by 1.6 trillion won last month, turning to growth from the previous month (-2.4 trillion won). The main reason was that unsecured loans expanded over the same period from -1.6 trillion won to 900 billion won.
By sector, bank household loans increased by 3.5 trillion won last month, with the increase widening from the previous month (1.9 trillion won). While banks' own mortgage loan growth narrowed over the same period from 1.4 trillion won to 1.1 trillion won, other loans expanded from -500 billion won to 1.4 trillion won over the same period.
Household loans in the second-tier financial sector increased by 1.3 trillion won last month, turning to growth from the previous month (-800 billion won). Insurance expanded from -300 billion won to 100 billion won over the same period, and credit card companies from -1.1 trillion won to 200 billion won. Mutual finance institutions expanded from 1 trillion won to 1.1 trillion won, and savings banks narrowed from -500 billion won to -200 billion won.
The financial authorities analyzed that the widening increase in household loans was because collective loans temporarily rose as more housing project sites executed interim-payment loans last month. They said a considerable portion of household loans are volumes of interim-payment loans contracted earlier. They also saw that, as housing transactions increased before the "10·15 measures," mortgage loans could rise again at year-end with a time lag.
Shin Jin-chang, Secretary-General of the Financial Services Commission (FSC), said at the meeting that day, "Management is proceeding smoothly within the total volume target range," but also urged, "As November is typically a period when the growth of household loans expands, it is necessary to closely monitor the trend of household debt going forward."
Secretary-General Shin emphasized that more than 45 violations of the actual status of misuse outside the intended purpose in bank business loans occurred from July to October and asked that the second-tier financial sector be closely examined for similar problems. Shin said, "For the Korean Federation of Community Credit Cooperatives (KFCC), please also conduct a thorough inspection at the federation level of the actual handling of business loans by individual credit unions."
The Financial Supervisory Service plans to wrap up on-site inspections of the second-tier financial sector within this month and take measures such as loan recovery against violating borrowers. The Ministry of the Interior and Safety conducted its own inspection of 2,897 KFCC business loans handled by July and uncovered cases of misuse outside the intended purpose.