Largest Increase in Household Loans This Year
Strengthened Supervision of Mortgage Lending in the Seoul Metropolitan Area
Monitoring Banks with Rapid Household Loan Growth
Last month, household loans increased by 6 trillion won compared to the previous month. This is the largest monthly increase so far this year. The government explained that the surge was driven mainly by home mortgage loans, as demand intensified ahead of anticipated interest rate cuts and the implementation of the third phase of the DSR (Debt Service Ratio) regulation. Financial authorities have announced plans to strengthen the management and supervision of mortgage loans, particularly in the Seoul metropolitan area.
On June 9, the Financial Services Commission held a household debt review meeting at the Government Complex Seoul, attended by the Financial Supervisory Service, the Ministry of Economy and Finance, the Ministry of Land, Infrastructure and Transport, the Bank of Korea, the Korea Federation of Banks, and the five major banks, to discuss future response measures.
In May, household loans across all financial sectors increased by 6 trillion won compared to the previous month. This marks the largest increase in household loans so far in 2025. The increase was 700 billion won higher than the 5.3 trillion won rise recorded in April, when household loans had already surged significantly.
The increase in household loans last month was led by mortgage loans, which alone rose by 5.6 trillion won compared to the previous month. The increase was seen in both the banking sector (from 3.7 trillion won to 4.2 trillion won) and the secondary financial sector (from 1.1 trillion won to 1.5 trillion won), with both sectors recording a larger increase than the previous month.
Other types of loans increased by only 400 billion won compared to the previous month, which is 100 billion won less than the previous month's increase. This was due to a slowdown in the growth of unsecured credit loans, which increased by 800 billion won, down from 1.2 trillion won in the previous month.
By sector, household loans in the banking sector totaled 5.2 trillion won in May, with the increase larger than the 4.7 trillion won recorded in April. Mortgage loans increased to 2.5 trillion won, up from 1.9 trillion won in the previous month, but the increase in policy loans was 1.6 trillion won, which is 200 billion won less than the previous month. Other loans were at 1 trillion won, similar to the previous month's increase.
In the secondary financial sector, household loans increased by 800 billion won, up from 500 billion won in the previous month. Mutual finance institutions saw an increase (from 300 billion won to 800 billion won), while savings banks recorded a slight decrease (from 400 billion won to 300 billion won).
Financial authorities plan to strengthen management and supervision, considering the recent sharp increase in household loans, particularly those backed by real estate, in connection with the current real estate market situation. Banks are required to thoroughly manage their own lending practices to prevent excessive funds from flowing into the real estate market for speculative purposes, which could lead to over-lending. The Financial Supervisory Service will conduct focused inspections to identify any cases where banks may have circumvented lending regulations in the process of issuing mortgage loans.
Authorities also plan to closely monitor the increase in household loans across all financial sectors. For banks, they will focus on monitoring whether each bank complies with monthly and quarterly management targets, and will take specific measures, such as discussing management plans, for banks with a rapid increase in household loans.
In the secondary financial sector, where the pace of household loan growth has also accelerated, authorities intend to closely monitor lending practices and trends through relevant industry associations. However, they will strengthen tailored financial support for low-income and genuine borrowers.
Kwon Daeyoung, Secretary General of the Financial Services Commission, stated, "Although household debt remains within manageable levels for now, factors such as the ongoing trend of interest rate cuts and the robust housing market continue to drive the expansion of household debt. Therefore, heightened vigilance and consistent risk management are more important than ever." He emphasized, "Financial institutions should review whether their household lending practices have become somewhat lax compared to the beginning of the year, and strictly adhere to their monthly and quarterly management plans to prevent funds from being concentrated in specific periods or regions."
He added, "Under a consistent policy of managing household debt, financial authorities will closely monitor recent trends in household debt and the real estate market, and will implement pre-prepared measures immediately if signs of market overheating appear."
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