Household loan growth slows in September

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Household loan growth slows in September

Published: 22 Sep. 2024, 21:12

This photo taken on Sept. 18 shows an advertisement for a mortgage loan product at a bank in Seoul. [YONHAP]

The growth of household loans slowed in September due to government efforts to curb home loans and the extended Chuseok harvest festival according to data released Sunday.

The cumulative household loan balance of the five major banks — KB Kookmin Bank, Shinhan Bank, Hana Bank, Woori Bank and NongHyup Bank — totaled 728.9 trillion won ($545.6 billion) as of last Thursday, up by a marginal 2.72 trillion won from the end of August.

If the current pace continues, the monthly total increase for September is expected to stand at around 4.1 trillion won at most, which would be less than half the rise clocked in August and in line with the increase seen in April.

Mortgage loans, which have driven the household loan increase, climbed 2.65 trillion won this month as of last Thursday. Given that the current trend remains in place, the total gain for September is projected to reach around 4 trillion won, or 45 percent of the total increase seen in August.

Market watchers attributed the slowdown to this month's extended Chuseok harvest festival and tightened government curbs on home loans, as well as lenders' own measures to restrict loans for home purchases in the greater Seoul area.

“While direct comparison is difficult due to the holiday effect, there is definitely a noticeable difference compared to last month when mortgage loans were issued at record levels and speed,” a market observer said.

The trend has led some in the market to speculate that the Korean central bank might lower borrowing costs as early as next month, in line with the U.S. Federal Reserve's decision to do so this month.

“With increasing pressure to lower rates due to weak domestic consumption and sluggish private spending, if housing prices and household loan indicators improve even slightly, there may be no reason for the central bank to delay a pivot any further,” a financial market watcher said.

Yonhap