Unusual Seoul Housing Prices... Bank Mortgage Loans Increase by Over 3 Trillion Won

Household Loans from Five Major Banks Surge by Over 3 Trillion Won in February
Driven by Interest Rate Cuts and Eased Real Estate Regulations

Household loans from the five major banks increased by more than 3 trillion won in February compared to the previous month. Household loans, mainly mortgage loans, increased as real estate prices showed signs of rising, centered around Seoul.

According to the financial sector on the 4th, the outstanding household loans of the five major commercial banks?KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup?stood at 736.7519 trillion won as of the end of last month, an increase of 3.0931 trillion won compared to the previous month. The outstanding household loans, which had decreased in January for the first time in 10 months, returned to an increasing trend in just one month.

The increase in household loans from the five major banks was driven by mortgage loans. At the end of February, the outstanding mortgage loans of the five major banks amounted to 583.3607 trillion won, up 3.3836 trillion won from the previous month. This is the largest increase in five months since September last year.

The rise in loans is understood to be due to the combination of banks lowering loan interest rates and Seoul’s easing of real estate regulations. On the 12th of last month, Seoul lifted real estate regulations in the Gangnam area, including Jamsil, Samsung, Daechi, and Cheongdam-dong, which had been restricted under the Land Transaction Permission System (Toheoje), causing housing prices to stir and overall loan demand to increase.

According to the Korea Real Estate Board, apartment prices in Seoul in the fourth week of February rose 0.11% from the previous week, marking the fourth consecutive week of increase. The rise was particularly notable in Songpa-gu and Gangnam-gu, which were removed from the land permission zones, and the upward trend is spreading to non-Gangnam areas as well.

At the end of February, the outstanding group loans of the five major banks were 158.6188 trillion won, down 1.7056 trillion won from the previous month. The outstanding jeonse loans stood at 120.8226 trillion won, decreasing by 841.1 billion won compared to the end of January. The outstanding credit loans were 101.9589 trillion won, shrinking by 49.3 billion won from the previous month.

At the end of February, the total deposits of the five major banks amounted to 2,065.8612 trillion won, an increase of 18.5549 trillion won from the previous month. The balance of time deposits surged by 15.7006 trillion won to 938.04 trillion won compared to the end of January. This is interpreted as a last-minute rush to subscribe to time deposits before deposit interest rates fell due to the Bank of Korea’s base rate cut.