Another Increasing Household Loan
- SEOUL, South Korea (AP) — South Korean credit loans have experienced a meaningful surge this month, fueled by economic uncertainty and increased living expenses.
- according to figures released April 20 by the financial sector, the combined household loan balance across five major commercial banks—KB kookmin, Shinhan, Hana, Woori, and NH Nonghyup—increased by...
- This increase follows a pattern of rising household loans throughout the year: 4.752 trillion won in January,3.93 trillion won in February, and 1.799 trillion won in March.
Credit Loans Surge in South Korea Amid Economic Concerns
SEOUL, South Korea (AP) — South Korean credit loans have experienced a meaningful surge this month, fueled by economic uncertainty and increased living expenses. This rise comes amid concerns about a potential economic downturn and fluctuating investment opportunities.
Household Loan balances Increase
according to figures released April 20 by the financial sector, the combined household loan balance across five major commercial banks—KB kookmin, Shinhan, Hana, Woori, and NH Nonghyup—increased by 2.49 trillion won compared to the end of March. The total balance now stands at 738.55 trillion won.
This increase follows a pattern of rising household loans throughout the year: 4.752 trillion won in January,3.93 trillion won in February, and 1.799 trillion won in March. The April figures represent a month-over-month increase compared to March.
Mortgage Lending Shows Moderate Growth
Mortgage loans, a significant component of household debt, also saw an increase, rising by 1.51 trillion won to reach a total balance of 585.68 trillion won.
In February, Seoul authorities re-designated the Jamsil, Samsung, Daechi, and Cheongdam areas—collectively known as “Jamsam Daecheong”—as land transaction permission zones. This led to a surge in real estate sales, with transactions doubling from 32,000 in January to 60,000 in February.
Typically, mortgage loans materialize two to three months after a property transaction. Contrary to expectations of a ample increase in April and May,the growth in mortgage loans remained consistent with previous levels.
An official from a major bank noted that mortgage counseling had been ongoing as late february.
Credit Loans Experience a Sharp Rebound
Credit loans, in contrast to the overall mortgage market, have rebounded substantially. The total credit loan balance reached 102.665 trillion won, marking a 1.59 trillion won increase compared to the end of the previous month when it stood at 101.60 trillion won.
Prior to this surge,credit loans had been declining for four consecutive months: a decrease of 486.1 billion won in December of last year, followed by declines of 159.5 billion won in January, 49.3 billion won in February, and 352.7 billion won in March. The current increase represents the largest monthly rise in 45 months, as July 2021, which saw an increase of 1.83 trillion won.
Analysts suggest that the primary driver behind this increase in credit loans is the growing number of individuals seeking funds to cover living expenses.
According to a bank official, credit loan activity saw increases early in March, followed by decreases later in the month.
Stock Market Investment as a Contributing Factor
The stock market’s reaction to trade policies may also be playing a role. The Korea Exchange reports that individual investors purchased a net total of 5.5 trillion won in stocks between April 1 and April 17.this contrasts with foreign investors, who sold a net 10.34 trillion won during the same period.
“It is indeed arduous to attribute the increase solely to a resurgence in real estate transactions,” a banking official stated.