Household Loans Increase by 1.3 Trillion Won in April... First Growth This Year

[Asia Economy Reporter Song Hwajeong] Household loans turned to an increasing trend for the first time this year last month.

According to the 'Household Loan Trends in April 2022' announced by the Financial Services Commission on the 11th, household loans across all financial sectors increased by 1.3 trillion KRW last month. However, the year-on-year growth rate was 3.1%, continuing a slowdown trend since the second half of last year. After reaching 10.0% in July last year, it fell to 8.6% in October, 7.1% in December, and continued to decline to 6.3% in January this year, 5.6% in February, and 4.7% in March.

While mortgage loans increased slightly, the decrease in other loans significantly narrowed compared to the previous month, resulting in an overall increase in household loan balances. Last month, mortgage loans across all financial sectors increased by 2.8 trillion KRW, slightly less than the 3 trillion KRW increase in the previous month. Other loans decreased by 1.6 trillion KRW, a sharp reduction in the decline compared to 6.5 trillion KRW in the previous month.

By sector, household loans increased compared to the previous month in most sectors, but in the mutual finance sector, the decline continued due to a decrease in non-mortgage loans. Last month, bank sector household loans increased by 1.2 trillion KRW. Mortgage loans increased by 2.1 trillion KRW, mainly driven by group loans (1.1 trillion KRW) and jeonse loans (1.1 trillion KRW). Other loans decreased by 900 billion KRW, mainly due to a 500 billion KRW decrease in credit loans, narrowing the decline compared to 3.1 trillion KRW in the previous month.

Household loans in the secondary financial sector increased by 100 billion KRW. Insurance (200 billion KRW), savings banks (300 billion KRW), and credit card companies (600 billion KRW) saw increases compared to the previous month, but the mutual finance sector decreased by 1 trillion KRW.

A Financial Services Commission official explained, "Household loans across all financial sectors stopped declining last month after a decrease that had continued since the beginning of the year, but overall remain at a stable level," adding, "The decrease in other loans, which had driven the decline in household loans, significantly narrowed due to the easing of credit loan management by financial companies."