"Maxed-Out Borrowing for Home Purchases" New Home Mortgage Loans Hit All-Time High in Q3 (Comprehensive)

Bank of Korea Releases First "Household Debt Statistics by Borrower"
New Home Mortgage Loans Hit 227.07 Million Won, Up 17.12 Million Won
New Household Loans Reach 38.52 Million Won, Up 260,000 Won
Driven by Borrowers in Their 30s and 40s (58.3%)

In the third quarter of this year, there was a surge in home purchases in Seoul and the greater metropolitan area, particularly among people in their 30s and 40s who engaged in "Yeongkkeul" (a Korean term referring to leveraging every possible financial resource to buy a home). As a result, the amount of newly issued home mortgage loans reached an all-time high.

A promotional flyer for jeonse loan guidance is posted at a commercial bank in downtown Seoul. Yonhap News

According to the "Household Debt Statistics by Borrower" released by the Bank of Korea on December 22, the average amount of new home mortgage loans per borrower in the third quarter was 227.07 million won, an increase of 17.12 million won compared to the previous quarter. This is the highest figure since the compilation of these statistics began in 2013.

With the exception of those in their 60s, the amount of new home mortgage loans per borrower reached record highs across all age groups. Borrowers in their 30s took out the most at 287.92 million won, followed by those in their 40s at 246.27 million won, those in their 20s at 220.07 million won, and those in their 50s at 185.52 million won. The only age group to see a decrease was those in their 60s, whose average amount dropped by 2 million won from the previous quarter to 145.76 million won. The largest quarter-on-quarter increase was also among those in their 30s, with a rise of 28.56 million won, followed by those in their 40s (22.89 million won) and those in their 20s (17.01 million won).

By region, all areas of the greater metropolitan area, including Seoul, Gyeonggi, and Incheon, posted record highs. The average amount of new home mortgage loans per borrower in Seoul was 359.91 million won, up 42.5 million won from the second quarter. Gyeonggi and Incheon also saw an increase of 22.81 million won to 243.24 million won. The metropolitan area average rose by 30.45 million won to 279.22 million won. Min Sookhong, head of the Household Debt Database Team at the Economic Statistics Department 1 of the Bank of Korea, explained, "Home mortgage loans are structurally increasing in line with the housing market situation, and recently, the growth has been particularly pronounced in the metropolitan area and among people in their 30s and 40s."

View of apartments and other buildings from Namsan, Seoul. Photo by Yonhap News

The average amount of new household loans per borrower, including home mortgage loans, in the third quarter was 38.52 million won, an increase of 260,000 won from the previous quarter. The average amount of new household loans per borrower had been rising each quarter from the third quarter of 2022 to the third quarter of last year, but then declined in the fourth quarter of last year (-3.68 million won) and the first quarter of this year (-850,000 won). It turned positive again in the second quarter (2.6 million won) and continued to increase in the third quarter.

By age group, the average amount increased for those in their 30s (2.43 million won) and 40s (720,000 won) compared to the previous quarter, but decreased for those in their 20s (-700,000 won), 50s (-870,000 won), and 60s and above (-1.03 million won). By region, the average amount increased in the metropolitan area (750,000 won), Chungcheong region (660,000 won), Honam region (340,000 won), and Daegyeong region (1.03 million won), but decreased in the Dongnam region (-1.33 million won) and Gangwon/Jeju region (-1.71 million won).

By type of financial institution, the average amount increased in banks (1.59 million won), non-bank institutions (2.32 million won), and others (830,000 won) compared to the previous quarter. By loan product, home mortgage loans (17.12 million won), non-housing secured loans (2.69 million won), and jeonse loans (3.55 million won) all increased, while unsecured loans (-3.85 million won) decreased. Other loans remained flat.

At the end of the third quarter, the average outstanding household loan per borrower stood at 96.74 million won, up 560,000 won from the second quarter. Home mortgage loans increased by 2.1 million won to 156.26 million won. In terms of share of total amount, those in their 30s and 40s accounted for 51.6%, the metropolitan area for 58.9%, banks for 61.8%, and home mortgage loans for 51.2%.

Meanwhile, the Bank of Korea, for the first time, released borrower-based household debt statistics compiled by borrower characteristics and usage patterns, based on sample data extracted from the NICE personal credit information database. With this announcement, the Bank of Korea has disclosed time series data from the first quarter of 2013 to the third quarter of this year, as well as annual data. Starting next year, the Bank of Korea plans to release quarterly data every quarter (in February, May, August, and November).