SoKor household loans rise in July on more mortgages

Demand may also be higher due to the summer vacation season.

South Korea’s household loans rose higher in July 2024 as housing transactions in Seoul grew.

Household loans across all financial sectors grew to approximately $3.9b (KRW5.3t) in July compared to the previous month, data from the Bank of Korea (BOK) showed. This is larger than the $3.09b (KRW4.2t) in household loans extended in June.

The BOK noted a recent growth of housing transactions in the Seoul metropolitan area as well as the potential rise in borrowing during summer vacation seasons as reasons for the expanded pace of growth.

“Household loans have been on an upward trajectory since April this year led by policy loans and mortgage loans from the banking sector,” the central bank said.

Home-backed mortgage loans grew to $3.97b (KRW5.4t) in July compared to June. 

Banks extended $4.11b (KRW5.6t) in mortgage loans in July, a smaller increase than the $4.56b (KRW6.2t) in June.

Other types of loans fell by $147.02m (KRW0.2t). Declines were seen in both banking and non-banking sectors, the BOK said.

The banking sector saw household loans expand at a slower rate whilst the non-banking sector continued to see declines, albeit at a slower pace, the BOK said.

Mutual finance businesses and insurance companies continue to see declines, whilst specialized credit finance companies and savings banks saw a growth in household loans in July.

The BOK said that it will continue to closely monitor situations in household debt growth.