Outstanding household loans in Korea's financial sector grew by 3.5 trillion won ($2.5 billion) last month, expanding from the previous month's pace. The increase was driven by rising demand for credit loans fueled by "bittu" (borrowing to invest in stocks) and continued disbursement of group loans by mutual finance institutions.
According to the "March Household Loan Trends" report released by the Financial Services Commission (FSC) on Tuesday, total household loans across the financial sector increased by 3.5 trillion won in March. This marked an expansion from the 2.9 trillion won increase recorded in February. While the government's aggressive lending restrictions pushed loans into decline in December last year, they have risen for three consecutive months since the start of this year.
By loan type, mortgage loans grew by 3 trillion won, narrowing from the 4.1 trillion won increase in the previous month. In contrast, other loans including credit loans rose by 500 billion won, reversing the 1.2 trillion won decline recorded in February. This turnaround reflects increased demand for credit loans for stock investment amid heightened market volatility.
By sector, banking sector household loans increased by a total of 500 billion won, reversing the 400 billion won decline in February. Banks' proprietary mortgage lending maintained a strong restrictive stance, with declines widening from 1.1 trillion won to 1.5 trillion won. However, overall balances grew as policy-backed loans (Didimdol, Beotimmok, and Bogeumjari loans) and other loans increased.
The non-banking sector expanded by 3 trillion won last month. NongHyup and Saemaul Geumgo (credit unions) led the growth as group loans approved before the suspension of new loan originations were disbursed. NongHyup and Saemaul Geumgo have seen household loan increases of 5.1 trillion won and 2.4 trillion won respectively since the beginning of this year. Insurance companies' household loans also grew by 600 billion won last month, expanding from the 200 billion won increase in February.
The FSC has ordered enhanced monitoring across all financial sectors, anticipating increased household loan volatility ahead of the expiration of the capital gains tax deferral for multi-home owners next month. "We will thoroughly prepare additional measures for household debt management, including regulations on loans to non-resident single-home owners for speculative purposes and expanding the scope of debt service ratio (DSR) requirements," an FSC official said.