Household loans fall but mortgage loans rise in December

[Image source: Gettyimagesbank]

South Korea saw a slowdown in household loans from the financial sector, but a rise of more than 5 trillion won ($3.79 billion) in mortgage loans in December 2023. The country’s financial authorities vowed to ensure loans are made based on borrowers’ debt repayment ability, including the introduction of a ‘stress debt service ratio (DSR)’ in 2024.

According to data released by the Financial Services Commission and the Bank of Korea on Wednesday, total household loans in the financial sector rose by 10.1 trillion won in 2023 compared to 2022.

Although household loans returned to growth in 2023 after declining by 8.8 trillion won in 2022, the increase was smaller than the annual increase of over 100 trillion won in 2020 and 2021 and total household loans in the financial sector increased by only 200 billion won in December 2023. Although it has been on the rise for nine consecutive months since April 2023, the monthly increase was significantly less than in October (6.2 trillion won) and November (2.6 trillion won) 2023.

Mortgage loans in the banking sector increased by 5.2 trillion won in December 2023, with the total balance of mortgages in banks hitting 850.4 trillion won at the end of the month. Although the monthly increase slowed down compared to the increases of 5.7 trillion won in both October and November 2023, the size of the debt remains large. Other loans in the banking sector, including credit loans, fell by 2 trillion won during the same period.