Although banks tightened lending regulations last month, both overdraft accounts and mortgage loan balances kept rising. As overdrafts increased, demand deposits that allow free deposits and withdrawals fell. Meanwhile, funds flowed into time deposits as the base rate rose.
According to the financial sector on the 2nd, the overdraft balance at the five major banks (KB Kookmin, Shinhan, Hana, Woori, NH Nonghyup) stood at 44.4669 trillion won as of July 30, the highest since August 2022 (44.7699 trillion won).
The July overdraft balance increased by 1.1857 trillion won from June, maintaining a rise in the 1 trillion won range for three straight months following May (1.8579 trillion won) and June (1.8329 trillion won).
A commercial bank official said, "As sidecar and circuit breaker measures were triggered for two consecutive days and the KOSPI slid to the 5,200 level, overdraft balances rose on demand aimed at bargain hunting."
Mortgage loan balances were 617.4287 trillion won, up 2.2831 trillion won from June (615.1456 trillion won).
In early July, KB Kookmin Bank cut the mortgage limit to 300 million won from 600 million won. The other five major banks are also temporarily halting loan applications through loan broker channels or restricting mortgage insurance enrollment, but the upward trend is continuing.
With home prices continuing to rise centered on Seoul, buying demand for dwellings appears to have steadily flowed in.
By contrast, the increase in household loans at the five major banks (excluding policy loans) exceeded the annual target submitted to the Financial Supervisory Service at the start of the year by more than 1 trillion won.
Meanwhile, demand deposits at the five major banks totaled 669.8635 trillion won as of the 30th of last month, down 52.4293 trillion won from June (722.2928 trillion won). Most of the funds that flowed out appear to have gone into the stock and real estate markets.
Separately, after the base rate hike, funds moved into time deposits. The time deposit balance at the five major banks was 974.3490 trillion won as of the 30th of last month, up 24.9492 trillion won from June (949.3998 trillion won).
Currently, banks are offering products with interest rates in the 3% range per year to attract deposits following the base rate increase.