After the government's 6·27 measures, the rise in banks' household loans, which had slowed, expanded again after a month. Mortgage loans also grew at a faster clip than the previous month. It appears that dwellings transactions that increased just before the lending curbs were imposed were reflected with a lag, affecting household lending.
Looking at the "August financial market trends" released by the Bank of Korea on the 10th, banks' household loans last month totaled 1,168.3 trillion won, up 4.1 trillion won from the previous month. The increase in household loans plunged from 6.2 trillion won in June to 2.7 trillion won in July after the 6·27 measures, then widened back to the 4 trillion won range in August.
By loan type, the widening increase in mortgages led the overall rise in lending. Last month, bank mortgages rose 3.9 trillion won from the previous month to 930.3 trillion won. The increase widened slightly from July (3.4 trillion won). Bank mortgages have been on the rise for 2 years and 6 months since March 2023.
Park Min-cheol, head of the market oversight team at the Bank of Korea, said, "As the impact of the 6·27 measures continues, mortgages increased as dwellings transactions that grew in May–June were reflected with a lag," adding, "Accordingly, the increase in household loans also expanded."
However, Park predicted that the government's 9·7 supply measures could curb the rise in household loans. He said, "It is necessary to watch over time for the effects of the government's dwellings supply and additional lending regulations," but added, "Given that concerns about supply shortages contributed to the recent overheating of the housing market, it will help ease instability in the housing market."
Other loans, including unsecured credit loans, increased by 300 billion won. They fell by 600 billion won in July, but turned to an increase as non-face-to-face loans, which had been temporarily halted last month, resumed. However, the increase was limited due to factors such as reductions in credit-loan limits.
Banks' lending to corporations increased by 8.4 trillion won last month. The increase was larger than the previous month (+3.4 trillion won). Loans to large corporations grew from 500 billion won to 3.8 trillion won, and loans to small and midsize corporations rose from 2.9 trillion won to 4.5 trillion won. The Bank of Korea said lending increased as large corporations sought funds for liability repayment and working capital, while small and midsize corporations saw more demand for facility funds.
Park said, "The expansion in banks' handling of corporate loans and corporations' funding demand combined to significantly increase the scale of growth," adding, "As management of household loans has been tightened, banks are relatively expanding their corporate lending business."
He added, "The easing of banks' burden to manage capital ratios in the first half of this year will also serve as a factor that increases capacity for corporate lending going forward," but noted, "Due to management uncertainty related to tariff negotiations, it will be difficult for corporations' funding demand to recover for the time being."