Key facts
- Household loans at five major South Korean banks increased in Q2.
- The total outstanding household loans reached 646.19 trillion won (US$421.5 billion) as of Thursday.
- Borrowers increased credit for stock investments and home purchases.
- Unsecured credit loans drove the increase in borrowing.
- Mortgage loans reached a record high of 614.53 trillion won.
Household lending at major South Korean banks saw an increase in the second quarter, reversing a trend of decline seen earlier in the year. This growth was primarily fueled by increased demand for unsecured credit loans for stock investments and a rise in mortgage borrowing due to climbing home prices and transactions.
Outstanding household loans at five key lenders—KB Kookmin Bank, Shinhan Bank, Hana Bank, Woori Bank, and NH Nonghyup Bank—reached 646.19 trillion won (US$421.5 billion) as of Thursday. This marks an increase of 824.1 billion won compared to the end of the previous year.
Earlier in the year, household loan balances had decreased by 5.86 trillion won by the end of March, attributed to borrowers repaying debt amidst tighter lending regulations. However, the rate of decline slowed significantly in April and May, with balances falling by 5.25 trillion won and 1.57 trillion won respectively. The trend decisively reversed in June, leading to overall growth in loan balances for the quarter.
Unsecured credit loans were a major driver of the borrowing increase, with outstanding credit loans totaling 108.33 trillion won as of Thursday, up nearly 4 trillion won from the end of April. This suggests investors leveraged credit to capitalize on a rally in the stock market.
Demand for mortgages also contributed to the rise, with outstanding mortgage loans at the five banks reaching a record 614.53 trillion won as of Thursday, an increase of 1.14 trillion won from the end of May. This indicates continued activity in the housing market despite rising prices.