May Bank Household Loans Increase by 6 Trillion Won... Growth Continues for Two Consecutive Months

Bank of Korea's 'Financial Market Trends in May'
Bank Household Loans Increase for Second Consecutive Month
Mortgage Loans Rise by 5.7 Trillion Won

[Image source=Yonhap News]

As housing transactions increased and policy loans were supplied through an interest subsidy method, mortgage loans rose, leading to a 6 trillion won increase in bank household loans in May compared to the previous month. This is the largest increase since October last year, when loans rose by 6.7 trillion won.

According to the "Financial Market Trends in May" released by the Bank of Korea on the 12th, bank household loans (including policy mortgage loans) increased by 6 trillion won compared to the previous month. Bank household loans have been rising for two consecutive months since April.

Looking at the components of household loans, mortgage loans increased by 5.7 trillion won compared to the previous month, expanding the increase from April's 4.5 trillion won. Other loans increased by 300 billion won, narrowing the increase from the previous month's 600 billion won.

Won Ji-hwan, Deputy Head of the Market General Team at the Bank of Korea, explained, "Mortgage loans have continued to see demand due to increased housing transactions, and the Housing and Urban Fund policy loans supplied through the interest subsidy method have expanded the increase. Other loans slightly increased due to seasonal demand for funds such as during Family Month, following the previous month."

Loans under the Housing and Urban Fund's interest subsidy method steadily increased from 300 billion won in March to 3.8 trillion won in May. Jeonse deposit loans also decreased by 1.7 trillion won in March but increased by 700 billion won in May.

In May, bank corporate loans increased by 6.9 trillion won. Among these, loans to large corporations increased by 1.1 trillion won, significantly narrowing the increase from the previous month's 6.5 trillion won. Loans to small and medium-sized enterprises (SMEs) rose by 5.8 trillion won, slightly expanding from the previous month's 5.4 trillion won.

Deputy Head Won said, "Loans to large corporations slowed sharply as seasonal factors such as temporary repayments at the end of the quarter and dividend payments disappeared, with working capital loans leading the increase. SME loans continued to rise due to some banks strengthening corporate loan operations and increased demand for facility funds."

He added, "Currently, household loans are being managed stably, and the possibility of a significant increase in bank household loans in June compared to the levels in April and May is limited."