"Stock Investment with Borrowed Money": Bank Household Loans Rebound in March After Four Months

Bank of Korea Releases "Financial Market Trends in March 2026"

Last month, bank household loans shifted to an increase for the first time in four months. Amid heightened volatility in the domestic stock market due to the Iran war, 'stock investment on borrowed money' (so-called 'Bittou') continued, as other loans expanded on days when stock prices fell.

On the 8th, various indices including the KOSPI are displayed on the index status board at the Hana Bank dealing room in Jung-gu, Seoul.

According to the "Financial Market Trends in March 2026" released by the Bank of Korea on April 8, bank household loans last month reversed to an increase of 500 billion won, mainly driven by other loans. Other loans, which had decreased by 700 billion won in the previous month, turned to an increase of 500 billion won in March. This marks the first increase in other loans in March in five years since 2021 (an increase of 800 billion won).

Park Mincheol, Head of the Market Operations Team at the Financial Markets Bureau of the Bank of Korea, explained, "There is usually a seasonal factor at the end of the quarter, as non-performing loans are sold off or written off, leading to a decrease in other loans in March. However, this time, the expansion of stock investment led to an increase in credit loans." He also noted that, particularly after the outbreak of the Middle East crisis, domestic stock market volatility was significant depending on how the war unfolded, and that other loans tended to increase on days when stock prices dropped sharply. Park added, "In the case of Bittou, an increase in stock investment through credit can accelerate the decline in stock prices during corrections and thus we are also closely monitoring market volatility risks."

Mortgage loans increased by 300 billion won in the previous month, but in March, the increase was less than 5 billion won. The Bank of Korea explained that this was due to strengthened household loan management by banks and a slowdown in demand for jeonse (lease) funds. Jeonse loans decreased by 400 billion won. Since the government's real estate loan regulations in the second half of last year, the volume of properties for sale has declined and the use of contract renewal rights has increased, leading to a decrease for seven consecutive months.

On April 1, the government announced a household debt management plan with a key point of lowering the annual growth rate of household loans this year to 1.5%, less than half of the projected nominal economic growth rate. Park commented, "Considering recent market trends and the government's household debt management stance, we expect the slowdown in household loans to continue for the time being," but also pointed out, "However, the period of slowing housing price increases in the Seoul metropolitan area has not been very long, and instability factors remain in the region's housing market, so it remains to be seen whether the trend will stabilize."

In March, bank corporate loans continued to increase, rising by 7.8 trillion won from the previous month. Loans to small and medium-sized enterprises (SMEs) increased by 4.5 trillion won. The expansion in corporate lending by major banks for 'productive finance' and the ongoing demand for operating funds from companies contributed to the larger increase. Loans to large corporations increased by 3.4 trillion won. The trend continued due to stronger bank lending operations and demand for funds to repay maturing corporate bonds. Corporate bond issuance (-300 billion won) continued to show net redemptions, as the volume of maturing bonds increased, affected by seasonal factors (such as general meetings of shareholders and business report submissions) and heightened interest rate volatility.

Park explained, "Typically in the first quarter, companies raise funds and institutions execute investment funds, resulting in increased corporate bond issuance, but this year is different. Due to Middle East uncertainties and increased rate volatility, companies are postponing bond issuance and instead raising funds through alternative means such as short-term commercial paper (CP)." However, CP and short-term bonds (-300 billion won) also shifted to net redemptions at the end of the quarter due to the repayment of short-term liabilities for financial ratio management, despite some companies raising funds to repay maturing corporate bonds.

In March, bank deposits increased by 20.5 trillion won, mainly due to demand deposits. Demand deposits (up 25.8 trillion won) increased as corporate funds flowed in for end-of-quarter financial ratio management and dividend payments. Time deposits (down 4.4 trillion won) turned to a decrease, affected by household funds flowing out for stock investment, among other factors.

Assets under management at asset management companies decreased by 29.1 trillion won, mainly due to equity funds. Equity funds (down 18.8 trillion won) and other funds (down 1.1 trillion won) both turned to a decrease, while bond funds (down 6.1 trillion won) saw their decline widen. Park explained, "As stock prices fell, the balance based on net asset value (NAV) decreased. However, excluding valuation, new capital inflows into equity funds (9.6 trillion won) continued in March." Money market funds (MMFs) turned to a decrease of 4.7 trillion won, mainly due to corporate funds flowing out for end-of-quarter financial ratio management.

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