South Korea Household Loans Rise – June 2024
- Household loans from five major South Korean banks continue to climb, driven by activity in local stock and housing markets.
- The rise in household loans reflects strong investment demand in real estate and financial markets.
- Unsecured loans also saw a jump, reaching 103.9 trillion won, a 600 billion won increase and the highest level as November.
South Korea Household Loans Surge Amid Housing Market Concerns
Household loans from five major South Korean banks continue to climb, driven by activity in local stock and housing markets. Data released Sunday shows an increase of nearly 2 trillion won ($1.46 billion) this month, reaching 750.08 trillion won as of Thursday. Banks including KB Kookmin, Shinhan and KEB Hana reported the increases.
The rise in household loans reflects strong investment demand in real estate and financial markets. New household loans have steadily increased, from 1.8 trillion won in March to 4.5 trillion won in April and 4.99 trillion won in May.
Unsecured loans also saw a jump, reaching 103.9 trillion won, a 600 billion won increase and the highest level as November. A important portion of these unsecured loans is believed to be used for stock and cryptocurrency purchases. Investors’ deposits at securities firms reached 62.9 trillion won as of Thursday, a three-year high, according to the Korea Financial Investment Association.
The five major banks extended over 3 trillion won in new home-backed loans in the first 12 days of June, coinciding wiht a surge in Seoul home prices, which saw their fastest increase in almost a year. Last week, Seoul apartment sale prices rose 0.25 percent, the largest weekly gain since August, according to the Korea Real Estate Board.
The Korea Composite Stock Price Index (KOSPI) had been on a seven-session winning streak until Thursday, exceeding the 2,900-point mark for the first time since Jan.14, 2022.
What’s next
Amid concerns about an overheating housing market, the Financial Services Commission and the Financial Supervisory Service will meet with financial institutions, including major banks, on Monday. The goal is to discuss measures to control the recent surge in household loans and monitor the role of lending practices in the current economic climate. The role of regulators is to ensure financial stability. The role of banks is to provide responsible lending.