The increase in household loans among the five major banks has approached 80% of their annual target for 2026. With rapid growth in not only mortgage loans but also credit loans and overdraft accounts, the financial sector is on high alert for managing household loans in the second half of the year.
As of July 9, the total household loan balance at the five major banks (KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup) reached 648.36 trillion won, an increase of 3.39 trillion won from the end of last year. This figure represents 78% of the annual growth target of approximately 4.34 trillion won submitted to the Financial Supervisory Service at the beginning of the year. Reports indicate that three of the five banks have already exceeded their individual targets.
In response, banks are effectively reducing new household loan operations for the second half of the year. Hana Bank has suspended the acceptance of loan applications for mortgage and jeonse loans scheduled for September since July 10, following a similar suspension for August applications just a week earlier.
Shinhan Bank has also closed its loan application channels and limited mortgage insurance to reduce mortgage loan limits. KB Kookmin Bank has lowered the loan limit for home purchases in the metropolitan area and regulated zones from 600 million won to 300 million won. Other banks may also impose additional restrictions if loan demand continues to surge.
Notably, the recent increase in household loans has been more pronounced in credit loans than in mortgage loans. From July 1 to July 9, the mortgage loan balance at the five major banks increased by 196.8 billion won, while credit loans surged by 781.5 billion won, nearly four times the increase in mortgage loans. This rise in credit loans is attributed to demand for borrowing to invest in the booming stock market.
The balance of overdraft accounts has also grown rapidly. The balance at the five major banks rose from 37.84 trillion won at the end of April to 41.34 trillion won at the end of June, an increase of 3.5 trillion won in just two months. Individuals aged 40 to 50 account for 65.5% of the total balance. Although those in their 20s have the lowest number of accounts and balance share, their average loan balance per account is 14.31 million won, surpassing that of individuals in their 50s and those aged 60 and above.
As a result, the financial sector is likely to strengthen its management of household loans. With the suspension of mortgage and jeonse loan applications and the reduction of loan limits already in place, credit loans and overdraft accounts may also come under tighter scrutiny. Some banks are considering reducing overdraft limits or scaling back new credit loan offerings.
A financial sector official stated, "As regulations on mortgage loans prevent capital inflow into real estate while also needing to manage credit loans directed toward the stock market, the calculations for financial authorities are becoming more complex. The more total management is tightened, the more it may dampen demand from genuine borrowers and those needing living expenses, necessitating a nuanced response that distinguishes between the characteristics of different types of loans."
* This article has been translated by AI.
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