Bank Mortgage Loans Rise Again by 4 Trillion Won: "Need to Monitor Impact of August Government Real Estate Measures"

Bank of Korea's "Trends in Financial Markets, August 2026"
Mortgage Loan Balance Reaches 952.5 Trillion Won at End of August, Up 4 Trillion Won
Driven by Increase in Housing Transactions and Occupancy in the Seoul Metropolitan Area

In August, the increase in bank-backed mortgage loans (housing mortgage loans) climbed back up to the 4 trillion won range for the first time in two months. This rise is analyzed to be the result of increased housing transactions in the Seoul metropolitan area and a surge in new housing supply since May, both driving greater demand for mortgage loans.

An apartment complex stretches across Songpa District, Seoul.

According to the "Trends in Financial Markets, August 2026" released by the Bank of Korea on September 9, the outstanding balance of bank housing mortgage loans at the end of last month was 952.5 trillion won, up 4 trillion won from the end of the previous month. This marks a steeper increase compared to the July rise of 3.5 trillion won. Lee Seung-yeop, head of the market management team at the Bank of Korea's Financial Markets Department, explained, "Although demand for jeonse loans, which are included under mortgage loans, continued to decrease, the increase in housing transactions and occupancy volume in the Seoul metropolitan area since May has led to a wider increase." Jeonse loans, which have been declining since September last year, shrank by 700 billion won in August following decreases of 700 billion won in June and 800 billion won in July.

As of the end of August, bank household loans reached 1,198.3 trillion won, an increase of 3.4 trillion won compared to the previous month-end. The pace of increase slowed compared to July (+5.5 trillion won). Despite the wider growth in mortgage loans, the overall increase was moderated by a contraction in other types of loans. Other types of loans grew by 2 trillion won in the previous month but decreased by 600 billion won in August. The slowdown in individual stock investment and banks’ strengthened management of credit loans contributed to this shift.

Lee added, "The upward trend in mortgage loan growth has remained relatively robust," and noted, "We need to continue monitoring the effects of the government's August real estate measures." He also stated, "Given the potential for variability in household debt caused by various factors, it is essential to pay ongoing attention to these trends for the time being."

Bank corporate loans increased by 9.7 trillion won, outpacing the previous month's growth of 7.7 trillion won. Loans to large enterprises rose by 4.9 trillion won. Lee explained, "There was a significant increase as major banks strengthened their lending activities, and companies’ demand for funds for corporate bond repayments converged." Loans to small and medium-sized enterprises (SMEs) also increased by 4.8 trillion won, with Lee attributing the growth to some banks’ enhanced financial support for SMEs. Corporate bonds continued to see a net redemption of 900 billion won due to the burden of higher interest rates and seasonal off-peak effects.

Banks’ deposits turned to a slight increase, rising by 100 billion won. Demand deposits, which had sharply fallen by 80.8 trillion won in the previous month, only dropped by 14 trillion won in August. While companies continued to withdraw funds to pay corporate taxes, the drop was moderated by a slowdown in the inflow of fiscal resources from local governments. Time deposits increased by 20.3 trillion won—a significant jump attributed to the inflow of household funds and temporary deposits from local governments.

Asset management companies also saw deposit inflows turn positive, increasing by 23.5 trillion won. Equity funds switched to a growth of 15.5 trillion won, impacted by the rise in stock prices, whereas bond funds shifted to a decrease, falling by 300 billion won amid rising interest rates. Money market funds (MMFs) increased by 5.6 trillion won, especially from corporate funds. However, the pace of growth slowed due to the base effect from the previous month's seasonal factors, such as the reinflow of corporate funds withdrawn at the end of the quarter for financial ratio management purposes.

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