Other loans extended by banks in May (such as unsecured loans, overdraft loans, and stock-backed loans) totaled 3.7 trillion won, the highest in 61 months since April 2021 (11.8 trillion won), the Bank of Korea said on the 11th. As the KOSPI index set a record high day after day, so-called "debt investing," or borrowing to buy stocks, increased.
A Bank of Korea official said, "Even considering that May is Family Month, lending rose sharply," and noted, "A significant portion is likely demand for individual stock investment funds." The official added, "Because leveraged investing is taking place, one should be mindful that forced selling could grow if a shock hits."
According to the "May financial market trends" the Bank of Korea released that day, total household loans, including other loans, came to 6.9 trillion won. It was the largest in 21 months since Aug. 2024 (9.2 trillion won).
Mortgage loan (including jeonse loans) totaled 3.2 trillion won, up from April (2.7 trillion won). Mortgage loan decreased by 300 billion won in cumulative terms from January to March, but turned to an uptrend starting in April. A Bank of Korea official said, "The government is expected to roll out additional measures," adding, "Because uncertainty in the real estate market is high, we need to watch longer to see whether the uptrend will continue."
Funds flowing into asset management companies in May (deposits) totaled 86.4 trillion won, maintaining a strong increase following the previous month (99.6 trillion won). Compared with May last year (25.2 trillion won), the amount more than tripled. The rise in the KOSPI index in May significantly boosted valuation gains. New investment funds were estimated at an inflow of 7.6 trillion won.
Corporate loans were tallied at 10.6 trillion won. Following the previous month (10.7 trillion won), the increase remained steep. Loans to small and midsize companies were 5.4 trillion won, and loans to large companies were 5.2 trillion won. The Bank of Korea assessed, "As banks continued their lending business, the increase widened due to working-capital demand such as for repaying corporate bonds."
Treasury bond yields rose sharply on factors including inflation and the possibility of a base rate hike. The three-year Treasury stood at 3.73%, up 0.78 percentage point from December last year (2.95%). Over the same period, the 10-year rose 1.21 percentage points to 4.07%.