Seoul Household Loan Growth Plummets as Regulations Take Hold
Seoul – The rate of increase in household loans issued by South Korea’s five largest banks has decelerated dramatically in recent weeks, signaling the impact of government measures designed to cool the property market and manage rising household debt. Data released Sunday reveals a significant slowdown following the implementation of stricter lending regulations.
the shift comes as South Korea grapples with soaring housing prices, particularly in the capital region, and increasing concerns about household financial stability. The recent cooling in loan growth suggests the government’s interventions are beginning to bite, perhaps easing pressure on both prospective homebuyers and the broader financial system. The trend will be closely watched to determine if it persists and to what extent it influences future monetary policy.
As of Thursday,outstanding household loans at KB Kookmin,Shinhan,Hana,Woori,and NH Nonghyup totaled 763.4 trillion won ($545.7 billion), an increase of 467.5 billion won since the end of August. However, the average daily growth over the September 1-18 period was just 26 billion won – an 80 percent decrease from the 126.6 billion won average seen last month.
“The pace of household loan debt increase seems to be slowing due to factors such as the June 27 property market measure,” a banking official stated, emphasizing the need for continued monitoring to assess the sustainability of this trend.
The government’s tightening of lending rules, initiated in late June, includes a 600 million-won cap on mortgage loans for properties in the capital region and a suspension of home-backed loans for individuals already owning multiple properties. These measures followed a period of increased housing transactions earlier in the year, fueled by relaxed lending restrictions and the temporary lifting of land transaction permit requirements in Seoul.
