Housing Prices and KOSPI Rise Together, "Debt-Investment" Surges... Household Loans at Top 5 Banks Soar by 4 Trillion Won

Household Loans Rise by 4 Trillion Won in June from Previous Month
Unsecured Loans See Two Consecutive Months of 2 Trillion Won Growth

As housing prices continue to rise and the domestic stock market remains strong, household loans from the five major commercial banks in South Korea increased by over 4 trillion won last month. Although financial authorities are tightening controls on household lending, the pace of loan growth has accelerated again due to simultaneous expansion in both home purchase demand and the so-called "debt-investment" trend, where individuals borrow to invest in stocks.

Yonhap News Agency

According to the financial sector on July 1, the outstanding balance of household loans at KB Kookmin Bank, Shinhan Bank, Hana Bank, Woori Bank, and NH Nonghyup Bank stood at 774.9608 trillion won at the end of June, up by 4.1378 trillion won from the previous month.

This is the largest monthly increase in 11 months, since household loans surged by 4.1386 trillion won in July last year. In May, household loans also rose by more than 3 trillion won, and the increase expanded to the 4 trillion won range in June. Both mortgage loans and credit loans contributed simultaneously to this growth in household lending. The outstanding balance of mortgage loans at the five major banks

rose by 1.7576 trillion won in June to reach 615.1456 trillion won by the end of the month. The continued rise in housing prices and expectations of further increases are believed to have fueled greater demand for loans to purchase homes.

The growth in credit loans was even more pronounced. The outstanding balance of credit loans last month increased by 2.155 trillion won compared to the previous month. After rising by 2.1741 trillion won in May, credit loans continued to increase by over 2 trillion won for two consecutive months. The total increase in credit loans over May and June alone amounted to 4.3291 trillion won.

Industry insiders attribute this trend to the recent strength of the domestic stock market, including the KOSPI, which has led to increased demand for investing in stocks using credit loans or overdraft accounts. While financial authorities have ordered banks to strengthen total volume controls on both credit and household loans, analysis shows that the movement of funds into the stock market has prevented the complete suppression of loan demand.

Liquidity on standby also surged significantly. The balance of demand deposits at the five major banks stood at 722.2928 trillion won at the end of last month, an increase of 7.6351 trillion won from the previous month. Demand deposits are funds that can be withdrawn at any time for investment or payments, indicating that more capital is waiting on the sidelines, watching the trends in the stock and real estate markets for the right time to invest. In contrast, the balance of time deposits rose by only 4.6837 trillion won to 949.3998 trillion won over the same period.

With the acceleration in household loan growth, banks are now tightening the requirements for both credit and mortgage loans. Measures include reducing the maximum limits for credit loans and overdraft accounts, restricting non-face-to-face loan applications, and lowering the acceptance limits for mortgage loans through loan brokerage firms as part of strengthened management efforts.

An industry source commented, "The simultaneous increase in mortgage and credit loans is being driven by expectations for a housing market recovery and a strong stock market. Even if banks strengthen their loan management, as long as expectations for asset market gains persist, the pressure for household loan growth may not subside easily."

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