Five major banks household loans, Increase conversion in 8 months...Expansion of Mortgage loans and Credit lines
Increasing loans, is this a sign of a changing trend? (Source: Yonhap News)
It has been found that household loans from major domestic banks have increased by nearly 2.5 trillion Won in April. In addition to a full-scale demand for mortgage loans, the investment demand taking advantage of stock market volatility has overlapped, leading to an increase in the use of credit loans and overdrafts. Excluding policy loans, banks' unique loan balances have also returned to an upward trend for the first time in eight months.
According to the financial sector, as of April 17, the household loan balance of the top five banks, including Kookmin, Shinhan, Hana, Woori, and NH Nonghyup, was 741 trillion and 509 billion Won. This is an increase of 2.4998 trillion Won compared to the end of March, already exceeding March's monthly increase of 1.7992 trillion Won and approaching February's 3.0931 trillion Won.
The core of the household loan increase was the mortgage loans. During the same period, the balance of mortgage loans increased by 1.5018 trillion Won, reaching 587 trillion and 182.3 billion Won. From the beginning of the year, banks lowered the borrowing threshold, and the anticipation of interest rate cuts and the lifting of the land transaction permit system implemented in February coincided to invigorate housing transactions, resulting in continued loan executions.
According to the Ministry of Land, Infrastructure, and Transport statistics, the number of housing sales in February was 50,698, a 32.3% increase from the previous month. In particular, the apartment transaction volume in Seoul was 4,743, jumping 46.7% in a month. A financial sector official explained, "It takes 1-2 months from consultation to execution for mortgage loans, so February's transaction increase is reflected in April's figures."
Credit loans are also increasing rapidly. Since the beginning of the month, the credit loan balance has increased by 1.0595 trillion Won, reaching 102 trillion and 665.8 billion Won. If this trend continues, it will be returning to an upward trend for the first time in five months since November last year. In particular, the balance of overdrafts increased by 643.5 billion Won, recording 38 trillion and 109.1 billion Won. Of this, 492.9 billion Won increased in a single day on April 7, coinciding with the U.S. retaliatory tariff announcement when the domestic stock market plummeted over 5%.
One commercial bank official stated, "As domestic and international stock markets continue to fluctuate, it seems that investors aiming for bottom fishing by opening overdrafts have increased."
The unique household loan balance, excluding policy loans, also rebounded. As of April 17, the balance of the top five banks increased by 779.6 billion Won compared to the end of March, reaching 634 trillion and 737.4 billion Won. The decline that continued for seven consecutive months since the second half of last year has been reversed. With the loan regulations slightly relaxed, the market is focused on how this increasing trend will unfold in the future.