Bank Household Loans Rise by 5 Trillion Won Again... Mortgages and Unsecured Personal Loans Both Increase

BOK: "Trends in Financial Markets in October 2026"
Mortgage loans rose 3.3 trillion won at end-October
Other loans also returned to growth for the first time in three months
Driven by group loans and net stock purchases, among other factors

Bank household loan growth widened again in October for the first time in four months. Analysts said the increase accelerated as both mortgage loans and other loans, including unsecured personal loans, rose amid an expansion in group loans and net stock purchases. As a result, the outstanding balance of household loans surpassed 1,200 trillion won for the first time. 

According to the Bank of Korea's "Trends in Financial Markets in October 2026," released on November 11, the outstanding balance of household loans at banks stood at 1,203.9 trillion won at the end of October, up 5 trillion won from the end of the previous month. The increase was substantially larger than the 500 billion won recorded in September.

Household loans rose by 7.6 trillion won month on month in June this year, after which the increase narrowed for three consecutive months before expanding again in October. Based on preliminary figures, this was the first time the outstanding balance had exceeded 1,200 trillion won.

The renewed acceleration in household loan growth reflected continued growth in mortgage loans and a return to growth in other loans, including unsecured personal loans.

The outstanding balance of mortgage loans rose by 3.3 trillion won from the end of the previous month to 958.7 trillion won. The increase was larger than the 2.9 trillion won recorded in September. Lee Seung-yeop, deputy director of the Market Operations Team at the Bank of Korea's Financial Markets Department, explained, "Demand for jeonse deposit loans continued to weaken, but the increase widened as banks extended more group loans, including loans for interim payments and relocation costs."

Other loans, which include unsecured personal loans, returned to growth for the first time in three months. Their outstanding balance rose by 1.7 trillion won from the end of the previous month to 244.3 trillion won. Lee said, "We believe that the base effect from seasonal factors in the previous month, including the sale and write-off of nonperforming loans at the end of the quarter and inflows of holiday bonuses, combined with individuals returning to net stock purchases in October, affected unsecured personal loans."

Jeonse deposit loans, which have been declining for 14 consecutive months since September last year, also fell by 800 billion won in October. Lee said, "Demand continues to decline as jeonse transactions themselves slow," adding, "If the slowdown in transaction volumes persists, jeonse loans may also continue to trend downward."

He said the future trajectory of mortgage loans would depend on trends in apartment sales. Lee said, "Overall sales volumes have edged down, but prices are still rising in Seoul's outlying areas and major parts of Gyeonggi Province." He added, "The factors influencing the market are pointing in different directions, so it is difficult to predict the direction of household loans based on the current situation."

Corporate loans at banks increased by 10.2 trillion won, remaining at a similar level to the previous month's 10.7 trillion won. Loans to large corporations rose by 4 trillion won, a smaller increase than the 7.5 trillion won recorded the previous month. However, they continued to grow strongly as banks stepped up lending and companies sought funds to repay corporate bonds.

Loans to small and medium-sized enterprises rose by 6.2 trillion won, a larger increase than the 3.2 trillion won recorded the previous month. Lee explained that the increase reflected not only banks' continued efforts to expand corporate lending but also greater demand for funds to pay value-added taxes.

Bank deposits increased by 30.4 trillion won, led by time deposits. Time deposits rose sharply by 24.1 trillion won from the end of the previous month, driven by banks' efforts to attract deposits in preparation for corporate deposits reaching maturity and by inflows of household funds.

By contrast, demand deposits fell by 15.5 trillion won from the end of the previous month as corporate funds that had been temporarily deposited to pay value-added taxes and manage quarter-end financial ratios flowed out.

Asset management companies' deposits returned to growth, increasing by 11.2 trillion won as money market funds (MMFs) saw renewed inflows. MMFs rose by 31.5 trillion won from the end of the previous month as corporate funds that had temporarily flowed out at quarter-end were redeposited and surplus government funds flowed in. Over the same period, bond funds increased by 6.3 trillion won, while equity funds fell by 26.5 trillion won amid declining stock prices.

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