Last month, household loans in the financial sector increased by over 6 trillion won, marking a return to growth after a month of decline. This rise is attributed to the execution of previously approved group loans and an increase in credit loans. The total balance of household loans at banks has surpassed 1,200 trillion won for the first time.
Despite the increase in household loans, some banks are gradually reopening their lending options that had been previously restricted. With the overall household loan management target raised and the repayment of existing loans creating additional capacity, some restrictions are being eased. As a result, concerns about a 'lending cliff' at the end of the year are diminishing.
According to the Financial Services Commission's report on 'October Household Loan Trends' released on November 11, household loans across the financial sector increased by 6.4 trillion won last month. This follows a decrease of 2.2 trillion won in September, marking a turnaround in just one month.
By loan type, the balance of mortgage loans increased by 4 trillion won compared to the end of the previous month, driving the overall increase in household loans. Financial authorities explained that while housing transactions in the metropolitan area have decreased, the execution of already approved group loans has continued to support the growth of mortgage loans.
Other loans also rebounded from a decrease of 5.4 trillion won the previous month to an increase of 2.4 trillion won last month. Among these, credit loans shifted from a decrease of 2.9 trillion won to an increase of 1.2 trillion won. Analysts attribute this change to the end of seasonal bonuses used for loan repayments and an increased demand for personal stock purchase funds.
By sector, bank household loans increased by 5 trillion won, a significant rise from the previous month's increase of 600 billion won. According to the Bank of Korea, the balance of household loans at banks, including policy mortgage loans, reached 1,203.9 trillion won at the end of last month, surpassing 1,200 trillion won for the first time.
As household loans rise again, some banks are showing signs of easing certain restrictions.
Hana Bank resumed the subscription for mortgage credit insurance (MCI) and mortgage credit guarantees (MCG) for mixed-rate mortgage loans on November 2. The bank has also restarted the offering of some non-face-to-face mortgage products and new products for switching from mortgage loans to residential officetels. However, restrictions on mortgage insurance for variable-rate mortgages remain in place. Shinhan Bank is also planning to resume subscriptions for mortgage insurance and guarantees starting in January 2024, aiming to offer 'mortgages without guarantees' again.
The easing of restrictions by banks is supported by adjustments to overall management targets and the capacity created by the repayment of existing loans. In August, financial authorities raised the annual household loan growth management target from 1.5% to 3.0% and decided to manage group loans separately from the total management targets for financial institutions. Based on these adjustments, financial authorities believe that concerns about a lending cliff at the end of the year are limited.
A financial sector official stated, "As the year-end approaches, we have nearly met the household loan targets, but repayments are consistently coming in, allowing for effective limit management."
Despite the increase in household loans, some banks are gradually reopening their lending options that had been previously restricted. With the overall household loan management target raised and the repayment of existing loans creating additional capacity, some restrictions are being eased. As a result, concerns about a 'lending cliff' at the end of the year are diminishing.
According to the Financial Services Commission's report on 'October Household Loan Trends' released on November 11, household loans across the financial sector increased by 6.4 trillion won last month. This follows a decrease of 2.2 trillion won in September, marking a turnaround in just one month.
By loan type, the balance of mortgage loans increased by 4 trillion won compared to the end of the previous month, driving the overall increase in household loans. Financial authorities explained that while housing transactions in the metropolitan area have decreased, the execution of already approved group loans has continued to support the growth of mortgage loans.
Other loans also rebounded from a decrease of 5.4 trillion won the previous month to an increase of 2.4 trillion won last month. Among these, credit loans shifted from a decrease of 2.9 trillion won to an increase of 1.2 trillion won. Analysts attribute this change to the end of seasonal bonuses used for loan repayments and an increased demand for personal stock purchase funds.
By sector, bank household loans increased by 5 trillion won, a significant rise from the previous month's increase of 600 billion won. According to the Bank of Korea, the balance of household loans at banks, including policy mortgage loans, reached 1,203.9 trillion won at the end of last month, surpassing 1,200 trillion won for the first time.
As household loans rise again, some banks are showing signs of easing certain restrictions.
Hana Bank resumed the subscription for mortgage credit insurance (MCI) and mortgage credit guarantees (MCG) for mixed-rate mortgage loans on November 2. The bank has also restarted the offering of some non-face-to-face mortgage products and new products for switching from mortgage loans to residential officetels. However, restrictions on mortgage insurance for variable-rate mortgages remain in place. Shinhan Bank is also planning to resume subscriptions for mortgage insurance and guarantees starting in January 2024, aiming to offer 'mortgages without guarantees' again.
The easing of restrictions by banks is supported by adjustments to overall management targets and the capacity created by the repayment of existing loans. In August, financial authorities raised the annual household loan growth management target from 1.5% to 3.0% and decided to manage group loans separately from the total management targets for financial institutions. Based on these adjustments, financial authorities believe that concerns about a lending cliff at the end of the year are limited.
A financial sector official stated, "As the year-end approaches, we have nearly met the household loan targets, but repayments are consistently coming in, allowing for effective limit management."
* This article has been translated by AI.
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