Non-Bank Housing Loans Decline for First Time This Year, Up 24 Trillion Won Year-Over-Year

Housing-related loans from non-bank deposit-taking institutions decreased for the first time this year in July, marking a slight decline after a sustained increase since the beginning of the year. However, compared to a year ago, the balance has increased by over 24 trillion won, maintaining a high growth rate.

According to the Bank of Korea's economic statistics system on the 23rd, the balance of housing-related loans from non-bank deposit-taking institutions stood at 148.1187 trillion won in July, a decrease of 46.6 billion won (0.03%) from the previous month.

This is the first month in which non-bank housing-related loans have decreased this year. The balance rose from 137.4676 trillion won in January to 144.5554 trillion won in March, and to 148.0121 trillion won in May. In June, the balance increased slightly to 148.1653 trillion won, but it fell in July.

The impact of mutual financial institutions, such as Saemaul Geumgo, credit cooperatives, and local agricultural cooperatives, halting or reducing group loans to manage total household loans may have been reflected with a lag. These institutions have been limiting the issuance of moving expenses, interim payments, and final payments this year. However, it is difficult to determine which type of loan contributed to the decrease in the overall housing-related loan balance in July.

A representative from the mutual finance sector stated, “The effects of halting or reducing group loans at the beginning of the year may still be ongoing. Since interim loans are executed in phases, the impact of loan issuance restrictions may appear with a delay.”

While the monthly balance has decreased, the annual growth remains significant. Non-bank housing-related loans, which were 123.8291 trillion won in July of last year, have increased by 24.2896 trillion won (19.6%) over the past year. During the same period, housing-related loans from deposit banks rose from 759.9446 trillion won to 781.7276 trillion won, an increase of 21.783 trillion won (2.9%). The growth rate in the non-bank sector is approximately 6.8 times that of deposit banks.

The proportion of housing-related loans within the total household loans from non-bank deposit-taking institutions also increased from 39.8% in July of last year to 45.1% in July of this year, a rise of 5.3 percentage points. Although the growth trend has paused in the past month, the share of housing-related loans in the structure of non-bank household loans has increased.

Looking ahead to the second half of the year, the resumption of group loan issuance will be crucial in determining the impact on loan balances. Financial authorities have decided to exclude the increases in moving expenses, interim payments, and final payments from the total household loan management performance of individual financial companies from August until the end of the year. As a result, the loan amounts executed by mutual financial institutions that resume group loan operations may be reflected in future statistics.

An industry representative noted, “The newly assigned total household loan quotas are not substantial, so the overall impact on total loans may be limited. However, since group loans are managed separately, we need to monitor the growth trend in the second half of the year.”