More People Borrowing to Buy Homes Again... Household Loans Surge by 6 Trillion Won in May

Largest Increase in Seven Months Since Last October
Driven by Expectations of Rising Home Prices and Anticipation of Interest Rate Cuts

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

Last month, household loans in the financial sector saw their largest increase in seven months.

According to the financial sector on June 1, as of May 29, the total outstanding household loans across all financial institutions had increased by nearly 6 trillion won compared to the end of the previous month.

Household loans have been on the rise for four consecutive months since February. In terms of monthly growth, this is the largest increase in seven months since October 2024, when the figure rose by 6.5 trillion won.

As of May 29, the outstanding household loans at the five major banks (KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup) stood at 747.2956 trillion won, an increase of 4.2108 trillion won from the end of April (743.0848 trillion won).

The balance of mortgage loans (including Jeonse deposit loans) reached 592.5827 trillion won, up 3.1527 trillion won from the end of April (589.4300 trillion won).

Unsecured loans increased from 102.4931 trillion won to 103.5746 trillion won, a rise of 1.0815 trillion won. On a monthly basis, this is the largest increase in three years and ten months since July 2021 (+1.8637 trillion won).

The increase in household loans is attributed to heightened expectations for rising home prices, especially in the Seoul metropolitan area, due to factors such as the anticipation of a base interest rate cut and the temporary suspension of the land transaction permit system in the first quarter. In addition, the demand for funds related to the Family Month holidays and subscription schedules for public offerings also contributed to the increase in unsecured loans.

With concerns about rising household debt growing, financial authorities plan to implement the third-stage stress Debt Service Ratio (DSR), which effectively reduces loan limits, starting next month.