Household debt in South Korea has reached a new all-time high, despite stringent government lending regulations. The increase in non-bank mortgage loans and a significant rise in investment borrowing, driven by a booming stock market, have contributed to this trend.
According to the Bank of Korea's preliminary statistics on household credit for the first quarter of 2026, the total household credit balance stood at 1,993.1 trillion won at the end of March. This marks an increase of 14 trillion won compared to the end of the previous quarter, setting a record since the data was first published in the fourth quarter of 2002.
While household credit decreased by 32 trillion won in the first quarter of 2024 due to monetary tightening, it rebounded to show growth for eight consecutive quarters starting from the following quarter. However, the increase in the latest quarter was smaller than the previous quarter's rise of 14.3 trillion won.
Household credit encompasses loans taken by households from banks, insurance companies, lending firms, and public financial institutions, along with credit card spending (sales credit). Excluding sales credit, the household loan balance at the end of the first quarter was recorded at 1,865.8 trillion won, an increase of 12.9 trillion won from the previous quarter.
By loan type, the mortgage loan balance reached 1,178.6 trillion won, reflecting an increase of 8.1 trillion won in the first quarter, marking two consecutive quarters of growth. This increase was influenced by a reduced decline in loans from public financial institutions and other financial intermediaries.
The balance of other loans, including credit loans and credit extensions from securities firms, amounted to 687.2 trillion won, up by 4.8 trillion won from the previous quarter. The growth was primarily driven by an increase in credit extensions from securities firms.
Lee Hye-young, head of the Bank of Korea's Financial Statistics Team, noted, "Credit extensions from securities firms increased by 7.3 trillion won in the first quarter, significantly up from the previous quarter's increase of 3.3 trillion won. This marks the third-largest increase on record."
In terms of lending sources, the balance of household loans from deposit banks was 1,009.6 trillion won, a decrease of 2 billion won. While mortgage loans increased by 3 billion won, other loans fell by 6 billion won. The increase in mortgage loans was significantly lower than the previous quarter's rise of 48 billion won.
The balance of household loans from non-bank deposit-taking institutions, including mutual finance, savings banks, and credit cooperatives, was 325 trillion won, reflecting an increase of 82 billion won, largely due to a surge of 106 billion won in mortgage loans. Other loans decreased by 25 billion won.
Lee added, "The increase in deposit banks has slowed significantly, while the rise in non-bank institutions reflects pre-regulatory demand for loans."
Regarding the ratio of household debt to GDP, Lee stated, "Household credit increased by 3.5% annually, while the preliminary real GDP growth rate was 3.6% compared to the same period last year. Based on this, the household debt ratio is expected to decrease further in the first quarter. It appears that household credit is gradually stabilizing, and if growth rates remain high, we anticipate a further decline."
Looking ahead, Lee remarked, "Household credit tends to increase as the economy grows. While we do not expect a significant surge in the future, we need to monitor the recent uptick in housing transactions closely."
* This article has been translated by AI.
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