Jeonse Loan Balance Exceeds 80 Trillion Won

As of December Last Year, 80.4581 Trillion
Increased by 27.3% Over One Year

Asia Economy DB

[Asia Economy Reporter Kim Min-young] Last year, the outstanding balance of jeonse deposit loans at the five major domestic banks exceeded 80 trillion won.

According to the industry on the 28th, the outstanding balance of jeonse deposit loans at KB Kookmin, Shinhan, Woori, KEB Hana, and NH Nonghyup Banks was recorded at 80.4581 trillion won as of the end of December last year. This marked a 1.8% (1.4169 trillion won) increase compared to the previous month, surpassing the 80 trillion won mark.

The jeonse deposit loans at the five major banks increased by 27.3% (17.2553 trillion won) last year. However, this was significantly lower than the previous year's growth rate of 41.9% (18.6493 trillion won).

The quarterly growth rate was highest in the first quarter at 6.8%. It slowed down to 6.2% in the second quarter and 6.3% in the third quarter, then dropped further to 5.6% in the fourth quarter.

The slowdown in growth during the second half of the year was due to seasonal demand decline and banks restraining loan operations in consideration of total household loan volume regulations. It is also analyzed that the government's strong real estate regulations had an impact. According to the Korea Real Estate Board, nationwide apartment jeonse prices fell by 1.78% last year, easing from the previous year's decline of 2.87%, but in the Seoul area, prices dropped by 0.69%, deepening the decline compared to the previous year's 0.03% decrease.

Experts predict that the growth trend of jeonse deposit loans will remain weak for the time being. This is based on the expectation that the government will continue to strengthen regulations on jeonse deposit loans. Recently, the government decided to restrict guarantees for owners of high-priced homes exceeding 900 million won not only in public guarantees but also in private guarantees. This effectively blocks high-priced home owners from obtaining jeonse loans.

An official from a commercial bank said, “The blocking of jeonse deposit loans for high-priced home owners will affect the overall growth trend,” adding, “Since regulations on jeonse deposit loans are likely to remain stringent for the time being, the overall growth in jeonse deposit loans is expected to further moderate.”