Due to Regulatory Tightening and Interest Rate Hikes, Bank Household Loans Slow Down... Increased by Only 2 Trillion Last Month

[Asia Economy Reporter Park Sun-mi] Amid strengthened household loan management in the banking sector and rising loan interest rates, household loans at the five major banks increased by only 2 trillion won last month.

According to the banking sector on the 1st, the outstanding household loans at the five major banks?KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup?stood at 708.688 trillion won as of the end of last month. This represents an increase of only 2.3621 trillion won compared to 706.3258 trillion won in October. The increase also shrank compared to October’s 3.44 trillion won.

Mortgage loans rose by 2.1122 trillion won to 503.3285 trillion won. Credit loans, which had turned to a decline in October for the first time in five months, increased by 300 billion won to 141.1338 trillion won in November.

The slowdown in household loan growth and the halt in the upward trend are due to the banking sector’s strengthened household loan management and efforts to moderate the pace, as well as concerns over increased interest burdens during the base rate hike period. With the Bank of Korea raising the base interest rate by an additional 0.25 percentage points on the 25th amid tightened loan regulations, borrowers’ interest burdens are expected to increase further.

Within the banking sector, there are expectations that mortgage loan interest rates will surpass an annual 6% and credit loan interest rates will exceed an annual 5% as early as the end of this year or at the latest early next year.