Korea’s household loan growth eases in Sept. on enhanced regulations

(Yonhap)

The growth in South Korea’s household loans has eased significantly in September under enhanced loan regulation and fewer working days due to the Chuseok holiday.

According to the country’s five major commercial banks on Sunday, the total balance of household loans stood at 728.14 trillion won ($546.5 billion) as of September 19, up 2.78 trillion won from the end of the previous month.

The five lenders are KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup.

If this trend continues, household loans are expected to increase by around 4 trillion won for the entire month of September, which would result in less than half the increase seen in the previous month.

Home mortgage loans grew by 2.66 trillion won through the first 19 days of the month, which is a significantly smaller increase compared to the 8.91 trillion won increase seen in the previous month.

Credit loans only increased by 303.7 billion won during the same period.

The banking sector shifted its approach from raising additional interest rates to tightening loan review regulations at the end of August.

As a result, it has become more difficult for both multi-homeowners and single-homeowners to obtain various loans, including mortgages. The introduction of the government’s second phase of a stress debt service ratio (DSR) also further reduced the borrowing limits.