Bank of Korea, April Financial Market Trends
Mortgage Loans Increase for Two Consecutive Months
Last month, bank household loans increased sharply by 2.3 trillion won, marking a return to growth after four months. Bank mortgage loans also continued to rise for the second consecutive month as demand for funds related to housing sales persisted.
According to the "Financial Market Trends in April" released by the Bank of Korea on the 11th, bank household loans (including policy mortgage loans) increased by 2.3 trillion won last month, the largest increase since November 2021.
Mortgage loans expanded as the demand for funds related to housing sales continued, while the decline in jeonse (long-term lease) loans somewhat narrowed. According to the Ministry of Land, Infrastructure and Transport, the volume of apartment jeonse transactions increased to 60,000 units in February, up from January. Although jeonse loans had been decreasing due to lower jeonse prices compared to the past and a shift to monthly rent, the increase in jeonse transactions in February is interpreted as having contributed to the narrowing of the decline in jeonse loans.
Yoon Ok-ja, Deputy Head of the Market General Team at the Bank of Korea's Financial Market Department, said, "The shift to an increase in household loans in April was influenced by the recovery in housing transactions at the beginning of the year and refinancing demand such as the execution of special BoGeumJaRi loans," adding, "there is usually a 2-3 month lag between housing transactions and household loan demand, so the increase in housing transactions in February compared to January seems to have affected the demand for mortgage loans in April."
Other loans decreased by 500 billion won, continuing a decline for the 17th consecutive month. This is the second-largest decrease since the statistics began to be compiled in April 2004. The seasonal factors disappeared, and the decline narrowed due to some demand for funds related to stock investments.
Deputy Head Yoon explained, "Typically, from the end of the year to around January or February, bonuses flow into households, increasing disposable funds, which leads to a pattern of repaying existing credit loans. However, this year, since credit loan interest rates were higher than usual, there was greater pressure to use disposable funds to repay credit loans." Accordingly, credit loans decreased significantly compared to previous years, leading to a narrowing of the decline in other loans. Additionally, individual stock investments increased in April compared to March, and the use of credit loans for stock investments contributed to the narrowing of the decline in other loans.
Bank corporate loans increased by 7.5 trillion won, with the expansion centered on large corporations.
Loans to large corporations surged by 3.1 trillion won, significantly expanding due to quarter-end temporary repayments being re-borrowed and demand for funds related to dividend payments.
Loans to small and medium-sized enterprises increased by 4.4 trillion won, steadily rising due to value-added tax payment demand and banks' accommodative lending attitudes.
Corporate bonds (from 2.2 trillion won to -900 billion won) shifted to net repayments due to the maturity of large-scale corporate bonds by some companies. Commercial paper (CP) and short-term bonds (from -300 billion won to 1.7 trillion won) switched to net issuance due to demand for working capital.
Bank deposits decreased by 13.4 trillion won, widening the decline. Demand deposits decreased by 14.8 trillion won as corporate funds were withdrawn for value-added tax payments and dividend payments, and local government funds were also withdrawn.
Time deposits (from -8.8 trillion won to -6.4 trillion won) continued to decline following the previous month as household funds flowed in but corporate funds continued to flow out.
Asset management company deposits increased by 8.6 trillion won, turning to growth.
Money Market Funds (MMFs) turned to an increase due to inflows of bank funds that had been withdrawn in the previous month to improve the Bank for International Settlements (BIS) ratio and deposits of surplus treasury funds.
Bond funds and other funds increased by 2.1 trillion won and 4.1 trillion won respectively, while equity funds decreased by 200 billion won.
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