Credit loans are declining for the second time in history due to high interest rates
Lease loans also fell due to the conversion of monthly rent
Business loans turned to increase in one month
It was estimated that the balance of home loans in January this year fell by 4.6 trillion won in one month as the number of deposit loans fell due to high interest rates and the change to monthly rent. As the demand for money to buy real estate has also shrunk, the result of high interest rates appears gradually, as a sharp drop in individual business loans.
According to the ‘Financial Market Trends in January 2023’ published by the Bank of Korea on the 9th, the bank’s home loan balance in January this year was KRW 1053.4019 trillion, a decrease of KRW 4.6466 trillion from the previous month, a decrease of one month.. This is the biggest drop since the first statistics were compiled in January 2004.
The sharp drop in bank home loans was mainly due to a 4.6 trillion won drop in other loans, including credit loans. This is the second biggest drop ever since the statistics were compiled. Other loans fell sharply as interest rates rose, lending regulations tightened, and seasonal factors such as holiday bonus inflows overlapped.
The balance of mortgage loans was 788,847.5 billion won, showing a steady trend with an increase of only 23.4 billion won from the previous month. Specifically, the downward trend continues with a drop of 1.8 trillion won in deposit loans. An official from the Bank of Korea explained, “As the number of conversions from jeonse to monthly rent increased, the amount of jeonse rent decreased compared to the previous year, and the jeonse price itself decreased, which appears to be has reduced the amount of loans.”
On the other hand, bank corporate loans increased by 7.9 trillion won from the previous month, increasing in one month. Small and medium-sized business loans increased by 1.3 trillion won, reversing a one-month increase since last December (-3.3 trillion won). Loans for small and medium-sized businesses (SMEs) are increasing due to the demand for money linked to VAT payments. However, personal business loans fell by 900 billion won due to high loan interest rates and sluggish demand for money related to real estate purchases, the first decline in January since statistics were compiled in 2009. Loans were found to be to large corporations increased by 6.6 trillion gained as working capital, which was repaid in a lump sum at the end of the year, was reworked.
Bank deposits plunged by 45.4 trillion won. Casual deposits fell by 59.5 trillion won, the largest ever, due to outflows of corporate funds that temporarily inflowed in the previous month, and due to the payment of value added tax and weakened incentives for banks to raise funds. Time deposits decreased by 900 billion gained due to the reduction in deposit interest rates.
Net corporate bonds were issued at 2.3 trillion won, an increase in issuance compared to last December (600 billion won). It is interpreted that the net publication has increased as management of the institution’s fund resumed at the beginning of the year. Commercial paper (CP) and short-term debentures were also issued in a net order of 6.9 trillion won, focusing on first-rate products.