This month, the increase in personal unsecured loans at major commercial banks far exceeded 100 times the increase in mortgage loans. As the KOSPI has set a new record high day after day, more borrowers are using unsecured loans and overdraft accounts to invest in stocks.
As of the 31st, according to the financial investment industry, the outstanding balance of personal unsecured loans at the five major banks—KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup—stood at 106.9909 trillion won as of the 28th. That was up 2.6496 trillion won from the end of April (104.3413 trillion won).
This is the largest increase in five years and one month since April 2021, when unsecured loans rose by 6.8401 trillion won. The outstanding unsecured loan balance itself also climbed to the highest level in two years and six months since the end of November 2023 (107.7191 trillion won).
In contrast to the surge in unsecured loans, the increase in mortgage loans was minimal. The five major banks' outstanding mortgage loan balance was 612.2693 trillion won as of the 28th, up just 25 billion won from the end of April (612.2443 trillion won).
The outstanding mortgage loan balance rose by 1.9104 trillion won in April alone, the largest increase in eight months since August last year (3.7012 trillion won), but the pace of growth slowed sharply this month.
Looking only at May, the 2.6496 trillion won increase in personal unsecured loans far exceeds 100 times the 25 billion won rise in mortgage loans. Even considering that the outstanding mortgage loan balance is far larger than the unsecured balance, the monthly growth rate for unsecured loans was 2.54%, overwhelmingly higher than the 0.004% growth rate for mortgage loans.
As unsecured loans swelled, the total outstanding household loans also grew by nearly 3 trillion won. The five major banks' outstanding household loans stood at 770.2728 trillion won as of the 28th, up 2.9768 trillion won from 767.2960 trillion won at the end of April. That is the largest increase since August last year (3.9251 trillion won).
The rise in unsecured loans was led by overdraft accounts, or revolving credit lines. The five major banks' outstanding personal overdraft balance increased from 39.7877 trillion won at the end of April to 41.9303 trillion won as of the 28th, up 2.1426 trillion won. A jump of more than 2 trillion won in actual usage within a month is the first in five years and one month since April 2021 (6.4389 trillion won).
The overdraft balance itself, on a month-end basis, is also the largest in three years and five months since the end of December 2022 (42.0546 trillion won). While overdraft balances typically decline around the 25th, when many corporations' paydays cluster, this month they instead increased by about 650 billion won from the 21st (41.2822 trillion won). Observers said this suggests that not a few borrowers opted for additional borrowing rather than repaying loans with their salaries.
The problem is that unsecured loan rates are rising as well. As of the 29th, unsecured loan rates at the five major banks were 4.16% to 5.85% a year. On a grade-1, one-year maturity basis, the upper end was near 6%. That is higher than the end of last year's 3.84% to 5.36% and the end of March this year—when uncertainty over the Middle East war intensified—at 3.85% to 5.53%. The market expects that if the base rate is raised, lending rates could climb further.