Household Loans Surpass Banks in Secondary Financial Sector... 3.2 Trillion Won Increase Due to 'Balloon Effect'

All Financial Sectors Household Loans Increase by 5.1 Trillion Won
Inspection Meeting "Close Monitoring of Concentration in Secondary Financial Sector"
One-Year Extension of Reverse Jeonse Return Loan Regulation Easing

Last month, the increase in household loans in the secondary financial sector significantly outpaced that of the banking sector. This phenomenon occurred as tightening household loans in banks led to a surge in loan demand in the secondary financial sector.

According to the 'November Household Loan Trends' announced by financial authorities on the 11th, household loans in the secondary financial sector increased by 3.2 trillion KRW, expanding from 2.7 trillion KRW the previous month, while the banking sector saw an increase of 1.9 trillion KRW, shrinking to about half of the previous month's 3.8 trillion KRW.

Within the secondary financial sector, loans increased in the order of mutual finance (1.6 trillion KRW), insurance (600 billion KRW), credit finance companies (600 billion KRW), and savings banks (400 billion KRW). In particular, mutual finance saw a significant expansion in the increase from 900 billion KRW the previous month to 1.6 trillion KRW.

In the banking sector, household loan growth slowed after strengthening management since August. Policy loans saw an expanded increase compared to the previous month (from 2 trillion KRW to 2.3 trillion KRW) due to a reduced decline in the Home Mortgage Loan (Bogeumjari Loan), but banks’ own mortgage loans turned to a decrease (from 1.5 trillion KRW to -800 billion KRW). Other loans such as credit loans showed only a slight increase compared to the previous month (from 300 billion KRW to 400 billion KRW).

Overall, household loans across the entire financial sector increased by 5.1 trillion KRW in November, narrowing from 6.5 trillion KRW in the previous month. Mortgage loans increased by 4.1 trillion KRW, a decrease in growth compared to 5.5 trillion KRW the previous month, while other loans increased by 1.1 trillion KRW, maintaining the previous month’s level.

At the household debt inspection meeting held by the Financial Services Commission on the same day, participants agreed to closely monitor the recent concentration of loans in the secondary financial sector. They particularly emphasized that mutual finance should focus the funds secured by adjusting the timing of raising the loan loss provision ratio on cleaning up non-performing loans and strengthening loss absorption capacity rather than on housing-related household loans.

Meanwhile, considering difficulties in returning jeonse deposits, the financial authorities decided to extend the regulatory relaxation measures on reverse jeonse return loans for one year until December 31, 2025.