Housing Prices Surge Leads to 8.2 Trillion Won Spike in August Mortgage Loans... Highest Since Statistics Began

Bank Household Loans Surge by 9.3 Trillion Won... Highest in 3 Years and 1 Month
Bank of Korea Financial Market Trends Data

A loan information board is posted at a branch of a commercial bank in Euljiro, Jung-gu, Seoul. Photo by Jo Yongjun jun21@

Due to rising housing prices in the Seoul metropolitan area, bank mortgage loans and household loans surged sharply last month.

According to the "Financial Market Trends in August" released by the Bank of Korea on the 11th, bank mortgage loans increased by 8.2 trillion won compared to the previous month. This is the largest increase since related statistics began to be compiled in 2004. Bank mortgage loans have been on the rise for 1 year and 5 months since March last year.

Including mortgage loans and other loans (such as credit loans and commercial real estate secured loans), bank household loans increased by 9.3 trillion won compared to the previous month. This is the largest increase in 3 years and 1 month since July 2021. Bank household loans have been increasing for five consecutive months since April.

The Bank of Korea explained that the recent rise in housing prices centered around Seoul and the increase in apartment transactions have significantly contributed to the increase in mortgage loans, which in turn affected the rise in household loans.

Park Min-cheol, Deputy Head of the Market General Team at the Financial Market Department of the Bank of Korea, said, "The increase in household loans was led by increased transactions mainly in the Seoul metropolitan housing market," adding, "In August, loan demand during the summer vacation season and loan demand for stock purchases at low prices due to the sharp decline in the stock market also contributed to the increase in loans."

However, due to government policies to curb household loans, the increase in household loans is expected to slow down in September compared to August. Deputy Head Park said, "In August, there was also a surge in last-minute loan demand ahead of the government's loan regulation policies in September," and added, "With the government's measures and banks' own efforts, the increase in loans is expected to shrink this month."

Meanwhile, bank corporate loans in August increased by 7.2 trillion won compared to the previous month, maintaining a similar pace to the previous month's increase of 7.8 trillion won. Although the increase in large corporate loans slowed, the expansion of loan business by some banks and increased demand for facility funds from small and medium-sized enterprises led to a wider increase in SME loans.

Last month, bank deposits increased by 21.5 trillion won compared to the previous month. Demand deposits turned to an increase due to the inflow of funds from local governments, and time deposits increased significantly, mainly corporate funds, due to banks' need to attract deposits and recognition of high deposit interest rates, according to the Bank of Korea.