South Korea’s Big Five Banks See Household Loans Fall in March on Tighter Rules, High Rates

Major commercial banks’ household loan balances fell last month for the first time in two months, as stricter lending rules and high interest rates drove a sharp decline in mortgage lending.

According to the financial sector on Tuesday, the combined household loan balance at the five largest banks — KB Kookmin, Shinhan, Hana, Woori and NH NongHyup — stood at 765.729 trillion won at the end of last month, down 136.4 billion won from a month earlier. After falling in December and January, the total edged up in February but slipped again.

Mortgage loan balances fell to 610.3339 trillion won, down 387.2 billion won from the end of February. Mortgages turned lower in January for the first time in 1 year and 10 months, rebounded in February, but failed to sustain the rise.

Unsecured credit loans, however, returned to growth. Personal credit loan balances totaled 104.6595 trillion won at the end of last month, up 347.5 billion won from the previous month, reversing a decline that had continued since December.

Time deposits fell 9.4332 trillion won in a month to 937.4565 trillion won, and installment savings deposits slipped by 251.2 billion won. Demand deposits rose 15.0477 trillion won to 699.9081 trillion won.

The downtrend in household lending is expected to persist for the time being. Financial authorities on Tuesday announced a “household loan management plan,” lowering this year’s target growth rate for household lending to 1.5% and introducing a total-volume cap that separately manages mortgage lending.