Bank of Korea's 'March Financial Market Trends'
Household Loans by Banks Turn to Decrease
Significant Reduction in Mortgage Loan Growth
Policy Loan Self-Funding Supply, Decrease in Jeonse Loan Demand
Last month, the increase in mortgage loans significantly slowed down, leading to a decline in bank household loans for the first time in 12 months.
According to the "Financial Market Trends in March" released by the Bank of Korea on the 11th, bank household loans (including policy mortgage loans) decreased by 1.6 trillion KRW compared to the previous month.
Bank household loans had decreased for three consecutive months from January last year (-4.7 trillion KRW), February (-2.8 trillion KRW), and March (-700 billion KRW), but then increased from April (2.3 trillion KRW) onward. This year, the upward trend continued in January (3.3 trillion KRW) and February (1.9 trillion KRW) as well.
Both mortgage loans and other loans, which make up household loans, decreased. In particular, the increase in mortgage loans significantly slowed down.
In March, mortgage loans increased by 500 billion KRW compared to the previous month, a much smaller increase than in January (4.9 trillion KRW) and February (4.7 trillion KRW).
Won Ji-hwan, Deputy Head of the Market General Team at the Bank of Korea’s Financial Market Department, explained, "Policy loans from the Housing and Urban Fund, such as Didimdol loans and Buteemok loans, which were previously supplied through existing bank funds, are now being supplied through the fund’s own resources and thus are not counted in bank loan performance." He added, "The Housing and Urban Fund has been increasing by about 3 trillion KRW monthly, and if this level is maintained, household loans in March are expected to be similar to the previous month."
Other loans decreased by 2.1 trillion KRW compared to the previous month due to continued repayment of unsecured loans and the sale and write-off of non-performing loans at the end of the quarter, continuing the downward trend from November last year (-400 billion KRW), December (-2 trillion KRW), January (-1.5 trillion KRW), and February (-2.8 trillion KRW).
In March, bank corporate loans sharply increased by 10.4 trillion KRW compared to the previous month, driven by banks’ strategies to expand corporate lending and corporate demand for funds.
Among these, loans to large corporations increased by 4.1 trillion KRW, expanding from the previous month’s 3.3 trillion KRW, as some large corporations had facility fund demands despite temporary repayments for managing financial ratios at the end of the quarter.
Loans to small and medium-sized enterprises (SMEs) increased by 6.2 trillion KRW, a larger increase than the previous month’s 4.7 trillion KRW, due to banks strengthening their loan sales and SME corporations’ demand for corporate tax payments.
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