In July, the growth of household loans in the financial sector slowed down. The increase in mortgage loans diminished, and the demand for personal stock investments decreased due to stock market adjustments, leading to a reduction in other loan growth.
According to the Bank of Korea's financial market trends report released on August 14, the balance of household loans at deposit banks stood at 1,194.8 trillion won at the end of July, an increase of 5.4 trillion won from the previous month. This figure is 2.2 trillion won lower than the 7.6 trillion won increase recorded in June, which was the largest rise since August 2024 (9.2 trillion won).
By loan type, the balance of mortgage loans rose by 3.4 trillion won to 948.4 trillion won over the month, a decrease of 900 billion won from the 4.3 trillion won increase in June. Other loans increased by 2 trillion won to 245.4 trillion won, a reduction from the previous month's increase of 3.3 trillion won.
Lee Seung-yeop, head of the Bank of Korea's market management team, explained, "The increase in mortgage loans was influenced by the rise in housing transactions in the metropolitan area during April and May. However, the ongoing decline in jeonse transactions and the slowdown in demand for interim payments on pre-sold units have contributed to the reduced growth rate."
Regarding other loans, he noted, "The slowdown in personal stock investments has led to a decrease in growth, but the increase remains high compared to previous years."
Looking ahead, the trend of household loans is expected to be influenced by the government's tax reform plans and comprehensive financial measures aimed at stabilizing the real estate market.
Lee added, "The demand for loans after August may be affected by various factors, but it is difficult to predict the flow of household loans as it depends on loan demand, the lending attitudes of financial institutions, and the state of the housing market."
At the end of July, the balance of corporate loans at deposit banks reached 1,421.1 trillion won, an increase of 7.7 trillion won from the previous month. Large corporations saw an increase of 3.8 trillion won, reflecting ongoing demand for working capital to repay corporate bonds, along with the reissuance of loans that had been temporarily repaid at the end of the quarter. Small and medium-sized enterprises also experienced a rise of 3.9 trillion won due to VAT payment demands and the expansion of lending operations by some banks.
Corporate bonds continued to see net repayments, decreasing by 1.9 trillion won from the previous month due to rising interest rates and seasonal off-peak effects.
Commercial paper (CP) and short-term bonds increased by 4 trillion won, transitioning to net issuance due to the reissuance of temporarily repaid amounts at the end of the quarter. Stock issuance rose by 1.5 trillion won, driven by large-scale capital increases by some major corporations.
* This article has been translated by AI.
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