Eager buyers and renters cause household loans to rocket

A promotional banner displayed at a bank in Seoul on April 10 [YONHAP]

Household loans grew three months in a row through to June led by soaring demand for housing.

The household loans extended by banks rose 5.9 trillion won ($4.6 billion) from May, putting the total balance at a record high of 1,062.3 trillion won as of the end of June, Bank of Korea data showed Wednesday.

Housing loans, including for mortgages and jeonse (lump-sum deposits), grew 7 trillion won on-month in June to 814.8 trillion won. The growth rate was the highest since February 2020.

Housing loans expanded on the back of rising demand for house purchases, housing supply and jeonse deposits, said the central bank in a statement.

The number of new units that became available for occupation stood at 42,000 nationwide in June, up from 28,000 in May. Loans for jeonse deposits grew 100 billion won in June, compared to a 600 billion-won fall in May.

The number of units traded in Seoul last month has not yet been updated, but the figure jumped 85 percent as of May compared to the beginning of the year, showed data from the Korea Real Estate Board.

However, the growth in housing loans is not concerning, according to financial regulators.

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“Housing transactions have not yet reached the average level,” said the Financial Services Commission in a joint statement with Financial Supervisory Service on Wednesday. It said a large portion of the housing loans were extended for purposes not related to unit purchases.

Housing loans newly extended for the purchase of units grew 9.1 trillion won in June from 7.2 trillion won a month earlier. Housing loans not related to unit purchase rose 8.0 trillion won from 7.8 trillion won in the same period.

The financial regulators will “take measures to stably manage household loans if necessary while continuously monitoring the growth of household loans,” said the regulators.

The remaining household loans, including unsecured loans, fell 1.1 trillion won to 246.1 trillion won. The fall was bigger than the 50 billion won decline a month prior.

Last year, outstanding household loans fell for the first time in 18 years amid rapid increases in the policy rate.

Corporate loans extended by banks grew 5.5 trillion won in June to 1,210.1 trillion won. The growth slowed from 7.8 trillion won in May.

Bank deposits jumped a steep 38.4 trillion won last month, up from 8.2 trillion won in May.

Deposits in money market deposit accounts soared 37.1 trillion won last month from a negative 8.8 trillion won a month earlier. But growth for time deposits slowed to 4.4 trillion won from 10.5 trillion won in the same period.

BY JIN MIN-JI [jin.minji@joongang.co.kr]