The Bank of Korea said on the 19th that in the first quarter, mortgage loans (loans related to dwellings) at nonbank deposit-taking institutions increased by 10.6 trillion won from the previous quarter. It was the biggest increase since the fourth quarter of 2007, when the Bank of Korea began classifying and compiling the related statistics. As commercial banks tightened screening in line with their household loan management stance, demand flowed to lower-threshold lenders such as savings banks, the Korean Federation of Community Credit Cooperatives (KFCC), NongHyup, and credit unions.
According to the provisional first-quarter household credit figures released by the Bank of Korea that day, the outstanding loan balance for all household loans, including loans related to dwellings at nonbank institutions, was 325 trillion won, up 8.2 trillion won from the previous quarter. It was the largest increase since the second quarter of 2021 (8.8 trillion won).
The Bank of Korea analyzed that loan demand surged in the first quarter due to tighter regulations. Earlier, on Apr. 1, the financial authorities released a household loan management plan that includes banning maturity extensions on mortgage loans for owners of multiple dwellings. The plan also set this year's household debt growth rate target at 1.5%.
In contrast, loans related to dwellings at deposit banks, including commercial banks, rose only 300 billion won from the previous quarter. That is because they conducted loan screening more conservatively than secondary financial institutions such as mutual finance institutions. The outstanding loan balance for all household loans at deposit banks was 1,009.6 trillion won, down 200 billion won from the previous quarter. This was the first decline in household loans at deposit banks in 12 quarters.
The Bank of Korea projected that loans related to dwellings could expand temporarily going forward. That is because transactions in dwellings increased temporarily before May 9, when the temporary relief from higher capital gains taxes for multiple-home owners ended. However, a Bank of Korea official added that "as the stance of managing household liabilities continues to be strengthened, household loans are unlikely to grow significantly over the long term."
Total household credit outstanding in the first quarter was 1,993.1 trillion won, up 14 trillion won from the previous quarter. The increase narrowed from the previous quarter's 14.3 trillion won. Of that, household loans rose by 12.9 trillion won to 1,865.8 trillion won over the same period, and sales credit increased by 1.1 trillion won to 127.3 trillion won.
Among household loans, loans related to dwellings increased by 8.1 trillion won to 1,178.6 trillion won, and other loans, including margin loans from securities firms, increased by 4.8 trillion won to 687.2 trillion won.