Financial authorities are intensifying management of household debt, extending their focus from bank loans to corporate internal loans. This move comes as an increase in housing transactions is expected to sustain the growth of mortgage loans for the foreseeable future, indicating a comprehensive response to household debt management in the second half of the year.
According to the Financial Services Commission's report on 'Household Loan Trends for June 2026' released on July 9, total household loans across all financial sectors rose by 8.3 trillion won last month. Although this increase is 1 trillion won less than the previous month’s rise of 9.3 trillion won, it remains at a high level, continuing the upward trend seen throughout the first half of the year.
Specifically, mortgage loans increased by 4.5 trillion won, a larger increase compared to the previous month’s 4 trillion won. While the growth of mortgage loans in the secondary financial sector slowed from 800 billion won to 300 billion won, the increase in bank mortgage loans expanded from 3.2 trillion won to 4.3 trillion won, driving the overall rise in household debt. This trend is attributed to the recent uptick in housing transactions and the execution of previously approved group loans.
The increase in credit loans was 2.6 trillion won, down from 3.6 trillion won the previous month, suggesting that self-regulatory measures by banks have had some effect. However, financial authorities are closely monitoring the potential for renewed volatility in credit loans depending on stock market conditions.
Financial authorities anticipate that the growth of mortgage loans will continue for the time being. Typically, mortgage loans are executed 2 to 3 months after a housing sales contract is signed, meaning that transactions concentrated before the end of the capital gains tax exemption in May are likely to sequentially lead to increased loans. In fact, group loans from banks and mutual financial institutions rose by 1.9 trillion won last month, reflecting the substantial influx of housing supply.
In response, financial authorities have requested that companies enhance self-management of internal loans to strengthen household debt management. Since internal loans are a welfare measure for employees, it is challenging to apply direct regulations from the financial sector. However, there are concerns that if these loans are combined with financial sector loans, it could lead to borrowing that exceeds the borrower's repayment capacity. Lee Chan-jin, the head of the Financial Supervisory Service, mentioned in a press conference last month that he recognizes the need for certain regulations on internal loans.
The Financial Services Commission has asked companies to establish self-management standards, including first-priority mortgage rights, installment repayment of principal and interest, restrictions on multiple homeowners, and limits on high-priced homes and housing area. Samsung Electronics has recently implemented self-management measures by restricting housing support through internal loans to homes under 85 square meters in metropolitan and large city areas.
Shin Jin-chang, the Secretary General of the Financial Services Commission, emphasized that while it is difficult to directly apply household loan regulations to internal loans, excessive internal loans could exacerbate instability in the housing market, and he hopes that companies will expand their self-management efforts.
* This article has been translated by AI.
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