Household Loans Rise 1.4 Trillion Won in January, Turning Upward...Surge in Secondary Financial Sector Lending

Mortgage loans up 3 trillion won...Bank sector down 600 billion, secondary sector up 3.6 trillion
Loan growth in February expected to expand on early-year sales resumption and new school term moving demand

Since the beginning of the new year, household loans have started to increase again, led by the secondary financial sector, resulting in a rebound in overall household lending. This is attributed to the shift in funding demand toward mutual finance institutions such as NongHyup and Saemaul Geumgo and other secondary financial institutions, as banks have raised their lending standards.

According to the January household loan trends released on February 11 by the Financial Services Commission and the Financial Supervisory Service, household loans across all financial sectors last month increased by 1.4 trillion won compared with the previous month. This marks a turnaround to growth after a decrease of 1.2 trillion won in October last year.

Among these, mortgage loans increased by 3 trillion won. Mortgage loans at banks fell by 600 billion won, with the decline slightly widening from the 500 billion won decrease in the previous month, whereas mortgage loans at secondary financial institutions rose by 3.6 trillion won, with the increase expanding from the 2.8 trillion won growth in December last year. Analysts say this clearly shows that borrowing demand is shifting from banks to the secondary financial sector.

Other household loans decreased by 1.7 trillion won, with the decline narrowing compared with the 3.6 trillion won drop in the previous month. This was due to the contraction in credit loans easing from a 2.5 trillion won decrease in December last year to a 1 trillion won decrease last month.

By sector, household loans at banks decreased by 1 trillion won, with the pace of decline slowing from the 2 trillion won drop in the previous month. Banks' own mortgage loans fell by 1.7 trillion won, with the decline widening from the previous month, but policy-type mortgage loans increased by 1.1 trillion won, with the growth slightly expanding. The decline in other household loans also narrowed from 1.5 trillion won to 400 billion won.

Household loans in the secondary financial sector, which drove the overall increase in household lending, rose by 2.4 trillion won, with the expansion in growth accelerating compared with the 800 billion won increase in the previous month. Mutual finance institutions saw loans increase by 2.3 trillion won, with the growth expanding from the previous month, and savings banks recorded a 300 billion won increase, shifting from a decline in the previous month to growth. In contrast, insurance companies saw loans fall by 200 billion won, with the decline widening, while specialized credit finance companies recorded a 20 billion won decrease, with the decline narrowing.

The Financial Services Commission projected that the scale of household loan growth could expand further in February, as full-scale marketing activities by financial companies coincide with moving demand for the new school term.

An official from the financial authorities said, "Since both the size and volatility of household loan growth may increase in February, every sector must strengthen its monitoring of household loan trends and make every effort to manage them."