Excessive Borrowing and Debt Investment Slow Down?…Unstoppable Household Loan Growth Suddenly Drops

Bank Loan Counter Reference Image (Source=Yonhap News)

[Asia Economy Reporter Kim Hyo-jin] The surge in household loans in the banking sector, which had skyrocketed due to the craze for 'Yeongkkeul' (borrowing to the limit) and 'Bittu' (investing with loans) as well as increased demand for living expenses amid the COVID-19 pandemic, has eased this month following last month.

It is analyzed that the combined effects of banks' total loan volume management through preferential interest rate and limit reductions, and a decrease in apartment transactions have influenced this trend.

According to the banking sector on the 25th, as of the 22nd of this month, the outstanding household loans of the five major banks?KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup?amounted to 654.4936 trillion won, an increase of 4.6027 trillion won compared to the end of September (649.8909 trillion won).

Although there are still five business days left this month, the increase is 30% less than September's 6.5757 trillion won and 45% less compared to August's record high increase of 8.4098 trillion won.

Mortgage loans, which increased by 4.4419 trillion won in September, have only risen by 2.7582 trillion won this month. The increase in unsecured loans also dropped sharply to 1.6401 trillion won, down 22% from September (2.1121 trillion won) and 60% from August (4.0705 trillion won).

According to the Bank of Korea's 'Financial Market Trends,' the monthly increase in household loan balances across the entire banking sector, including the five major banks, reached a record high of 11.7 trillion won in August since statistics began in 2004. The increase in September (9.6 trillion won) was the second highest ever.

The monthly increase in other bank loans, mostly consisting of unsecured loans, also peaked at 5.7 trillion won in August, just two months ago. The banking sector recently submitted a plan to the Financial Supervisory Service to manage the monthly increase in unsecured loans at around 2 trillion won until the end of the year.

This content was produced with the assistance of AI translation services.