February Household Loans See Largest Increase in 4 Years... Up 5 Trillion Won from Previous Month

Moving Demand and Lunar New Year Holiday Drive Loan Surge
House Price Growth Hits Six-Month High
Government to Hold Real Estate Market Inspection Meeting on the 5th

Last month, the total increase in household loans across the financial sector rose by about 5 trillion won compared to the previous month, marking the largest increase in four years. This is attributed to the recent relaxation of real estate regulations such as the Land Transaction Permission System, which has led to an increase in household loans mainly in some areas of Seoul.

Lee Bok-hyun, Governor of the Financial Supervisory Service, is attending and speaking at the on-site meeting for household loan borrowers and experts held at KB Kookmin Bank in Yeouido, Seoul on the 4th. Photo by Jo Yong-jun jun21@

According to the financial sector on the 2nd, as of the 27th of last month, the total household loans across the financial sector increased by around 5 trillion won compared to the previous month.

Cases where the total household loans in the financial sector significantly increased in February, the beginning of the year, have not occurred since February 2021 (9.7 trillion won), when household loans surged due to low interest rates following COVID-19, marking a four-year interval.

The increase in household loans in the banking sector compared to the previous month exceeds 3 trillion won, while the secondary financial sector has risen to the mid-1 trillion won range, approaching around 5 trillion won in total.

With household debt rising to levels seen in April last year, authorities are closely monitoring the situation. In fact, household loans, which turned to an increasing trend from April last year, rose to 5.2 trillion won in July of the same year and jumped to 9.7 trillion won in August.

Afterward, from September to November, the increase narrowed to the 5 to 6 trillion won range, then dropped to the 2 trillion won range in December, and in January showed a decline for the first time in ten months.

Financial authorities report that excluding the increase in policy loans, credit loans and mortgage loans increased in both the banking and secondary financial sectors due to moving demand for the new school semester and the Lunar New Year holiday. However, it is understood that the increase in loans was not concentrated in the Gangnam area of Seoul or the metropolitan area.

According to the Korea Real Estate Board, the weekly house price increase in the four Gangnam districts of Seoul in the fourth week of February was 0.36%, marking the largest increase in half a year since the fourth week of August last year (0.37%).

The government analyzes that the expansion of real estate price increases in the metropolitan area has not yet affected household loans, but will hold a real estate market inspection meeting on the 5th to discuss countermeasures.