The focus of household lending is shifting from mortgage loans to credit loans. As expectations for a stock market rally grow, demand for investment funds has surged, with credit loans from the five major banks increasing by more than 100 times the amount of mortgage loans in May.
As of May 28, the total balance of personal credit loans at KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup banks reached 106.99 trillion won, an increase of 2.65 trillion won from the end of April, when it stood at 104.34 trillion won.
This monthly increase is the largest since April 2021, when the KOSPI first surpassed the 3,200 mark. The current balance of credit loans is also the highest since November 2023, when it was 107.72 trillion won, marking a 2.5-year peak.
In contrast, mortgage loans have remained stagnant under the government's strict lending regulations. The balance of mortgage loans at the five major banks was 612.27 trillion won in May, increasing by only 250 billion won compared to the previous month. This is a significant slowdown from the previous month, when mortgage loans increased by 1.91 trillion won. Consequently, the increase in credit loans in May exceeded that of mortgage loans by more than 100 times.
The expansion of credit loans has been primarily driven by overdraft loans. The balance of personal overdraft loans at the five major banks rose from 39.79 trillion won at the end of April to 41.93 trillion won by May 28, an increase of 2.14 trillion won. This marks the first time since April 2021 that the balance of overdraft loans has increased by over 2 trillion won in a month. The current balance is also the highest since December 2022.
Typically, overdraft balances decrease around the 25th of each month when salaries are paid, but this month saw the opposite trend. The balance, which was 41.28 trillion won on May 21, increased by about 650 billion won within a week. Market analysts believe that borrowers are opting to draw additional funds for stock investments rather than repaying their loans with their salaries. The recent surge in the KOSPI, which has been hitting record highs, is also cited as a factor behind the increase in credit loans.
However, the concern is that loan interest rates are hovering around 6%. As of May 29, the interest rates for credit loans at the five major banks ranged from 4.16% to 5.85% (for top credit ratings and one-year terms). This is higher than the rates at the end of last year (3.84% to 5.36%) and also above the rates from March this year (3.85% to 5.53%), when geopolitical tensions in the Middle East caused market rates to spike.
Market analysts anticipate that the Bank of Korea may raise interest rates at least twice this year. Such increases could not only heighten the burden of interest payments for borrowers but also act as a downward pressure on the stock market, creating a dual challenge for investors engaged in debt-funded investments.
A banking industry official stated, "The recent increase in credit loans is largely driven by demand for investment purposes. We cannot rule out the possibility of rising delinquency risks centered around credit loans."
* This article has been translated by AI.
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