As borrowing from financial institutions increased for home purchases, households' surplus funds in the third quarter of last year shrank by 3.5 trillion won compared to the previous quarter.
Due to the impact of loan regulations and other factors, apartment transactions have slowed down, causing listings to continue to accumulate. On the 24th, sale and lease listings were posted at a real estate agency in Gangnam, Seoul. Photo by Kang Jin-hyung
According to the '2024 Q3 Financial Flow (Preliminary)' data released by the Bank of Korea on the 7th, the net financial operations of households and non-profit organizations in the third quarter of last year amounted to 37.7 trillion won, down from 41.2 trillion won in the previous quarter.
Net financial operations refer to the difference between financial asset transactions (fund operations) and financial liability transactions (fund procurement), indicating the surplus funds of economic agents. Money managed through cash, deposits, bonds, insurance and pension reserves, stocks, etc., is included in fund operations, while loans correspond to fund procurement.
In the third quarter of last year, fund operations by households and non-profit organizations increased by 1.9 trillion won from 55.7 trillion won in the previous quarter to 57.6 trillion won. Although deposits at financial institutions decreased, fund operations expanded mainly in equity securities and investment funds, insurance, and pension reserves.
During the same period, fund procurement increased by 5.3 trillion won from 14.6 trillion won to 19.9 trillion won. This was due to increased borrowing from financial institutions such as mortgage loans (Judaemae) as demand for home purchases rose. According to the Bank of Korea's household credit statistics, mortgage loans increased by 19.4 trillion won compared to the previous quarter. According to data from the Korea Real Estate Board, nationwide housing sales volume increased from 171,000 units in Q2 to 180,000 units in Q3 last year.
The net fund procurement of non-financial corporations (general companies) in the third quarter of last year expanded to 25.5 trillion won from 23.7 trillion won in the previous quarter. This was influenced by a slight increase in fixed asset investment by companies compared to the previous quarter and a decrease in companies' net income.
The general government's net financial operations in the third quarter of last year amounted to 18.7 trillion won, shifting from net fund procurement in the previous quarter to net fund operations. Although the government's total revenue slightly decreased compared to the previous quarter, total expenditure was heavily concentrated in the first half of the year, resulting in a significant reduction.
Meanwhile, at the end of the third quarter of last year, the financial assets of households and non-profit organizations totaled 5,429.9 trillion won, an increase of 21.6 trillion won from the previous quarter, and financial liabilities amounted to 2,356.2 trillion won, up 22.1 trillion won from the previous quarter.
At the end of the third quarter of last year, the household debt-to-nominal GDP ratio was 90.8%, down from 92.1% in Q1 and 91.1% in Q2. This was due to the household debt growth rate being lower than the nominal GDP growth rate.
Kim Seong-jun, head of the Financial Flow Team at the Bank of Korea's Economic Statistics Bureau, explained, "Looking at household debt data up to October-November last year, the increase was smaller compared to the third quarter," adding, "The downward stabilization trend of the household debt ratio relative to nominal GDP is expected to continue in the fourth quarter as well."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
