In the second quarter, household credit (household debt) increased by more than 24 trillion won, setting a new all-time high once again. This surge was influenced by a rise in transactions of dwellings, leading to a nearly 15 trillion won increase in mortgage loans.
According to the Bank of Korea's report on '2025 second quarter household credit (provisional)', the balance of household credit at the end of the second quarter was reported to be 1,952.8 trillion won, an increase of 24.6 trillion won from the end of the previous quarter. The household credit in the first quarter recorded an all-time high of 1,928.7 trillion won, and has broken the record once again.
Household credit decreased by 3.1 trillion won in the first quarter of last year, marking a drop for the first time in four quarters since the first quarter of 2023 (-14.5 trillion won), but rebounded in the second quarter (+13.4 trillion won), continuing an upward trend for the fifth consecutive quarter. The increase was about ten times larger than the rise in the first quarter of this year (+2.3 trillion won).
Household credit refers to the comprehensive debt that households in Korea have from financial institutions such as banks and insurance companies (household loans) as well as credit card usage (sales credit). Household loans refer to the loans taken by households for living expenses and side businesses, and sales credit refers to transactions made on credit through credit cards and installment financing.
Among household credit, the household loan balance increased by 23.1 trillion won to 1,832.6 trillion won compared to the previous quarter. In terms of the increase amount, it marked a significant rise compared to the first quarter (+3.9 trillion won).
Mortgage loans, which account for 60% of household loans, increased by 14.9 trillion won compared to the previous quarter. This is interpreted as the continuation of increased dwelling transactions following the removal and subsequent reassignment of the land transaction permission system in February this year. Other loans, centered around credit loans and securities company credit extensions, also expanded, increasing by 8.2 trillion won compared to the previous quarter.
By lending window, household loans from deposit banks (balance of 993.7 trillion won) increased by 19.3 trillion won over three months. Household loans from non-bank deposit taking institutions such as mutual financial institutions, mutual savings banks, and credit cooperatives (balance of 314.2 trillion won) rose by 3 trillion won, while those from other financial institutions such as insurance, securities, and asset-backed companies (balance of 524.7 trillion won) increased by 9 billion won.
In the case of deposit banks, the increase in mortgage loans expanded while other loans turned positive, leading to a growth in scale. Non-bank deposit taking institutions expanded their scale as mortgage loans increased and the decline in other loans eased. Other financial institutions turned positive as the decrease in mortgage loans slowed and the increase in other loans expanded.
The balance of sales credit increased by 1.4 trillion won to 120.2 trillion won compared to the previous quarter. It had decreased by 1.6 trillion won in the previous quarter, but switched to an increase, mainly due to the growth driven by credit-specialized companies. Generally, in the fourth quarter, increased end-of-year consumption leads to a rise in card usage and sales credit, whereas in the first quarter, there tends to be a decline due to base effects.
Kim Min-soo, head of the Financial Statistics Team at the Bank of Korea, noted, 'The increase in mortgage loans and credit extensions from securities companies affected the rise in household credit for the second quarter.' He added that 'mortgage loans for housing purchases may show a high growth rate for the time being, and while the rise in dwelling transaction prices in the metropolitan area has stabilized, it is necessary to observe the trend for stability.'