Household loan value dips, but likely not for long
According to the Bank of Korea, household borrowing from commercial banks and nonbank institutions was 654.4 trillion won ($574.3 billion) in February, 1.8 trillion won less than the 656.2 trillion won in January.
“Loans in February retreated as mortgage loans shrank,” said a BOK official. “Additionally, Lunar New Year holiday bonuses and year-end tax refunds also contributed to consumers’ borrowing less.”
Borrowing in the last quarter of 2012 was boosted by the Lee Myung-bak government’s exemption on capital gains tax for sellers of apartments. The value of household loans grew to a record 659.9 trillion won in December.
But the tide quickly turned when the exemption expired, and loan value fell nearly 3.7 trillion won in January, the sharpest drop since 2003.
Borrowing at commercial banks and nonbanking financial institutions also retreated in February.
Commercial banks’ household borrowing amounted to 462.3 trillion won, 1.6 trillion won less than the previous month. Loans at nonbanking institutions were 200 billion won less at 192.2 trillion won.
Borrowing in the greater Seoul area was 1.5 trillion won less at 412 trillion won, while borrowing in the rest of the country was 300 billion won less than the previous month at 242.5 trillion won.
Although the trend likely continued in March, in coming months borrowing is expected to surge, thanks to government measures announced earlier this month that include easing the debt-to-income and loan-to-value ratio requirements for home loans.
By Lee Ho-jeong [email@example.com]
More in Finance
Kospi hits midday high, closes down on profit-taking
Naver Financial launches advice service for entrepreneurs
[NEWS ANALYSIS] As foreigners rush back, market does an about-face
CU gets into the foreign exchange transaction business
Kospi hits another record high despite Covid spike