A citizen is looking at property information in front of a real estate agency in Songpa-gu, Seoul on the 11th. News1
“Bank household loans continued to increase for the fifth consecutive month. This trend is attributed to the expansion of home-backed loans (주택담보대출) as apartment transactions have been on the rise recently with a focus on the capital metropolitan area.”
“On the 12th, according to the financial market trends data from the Bank of Korea, the balance of bank household loans (including policy mortgage loans) at the end of last month totaled 112.8 trillion won, which increased by 5.5 trillion won from the previous month. Household loans took a step back in March (-1.7 trillion won) after a year but rebounded in April (+5 trillion won) and continued to increase. The growth rate slightly decreased compared to June’s increase of 5.9 trillion won.”
“In terms of types of household loans, home-backed loans, including advance payment loans for housing (882.5 trillion won), increased by 5.6 trillion won, while other loans such as credit loans (237.3 trillion won) decreased by 100 billion won. This was explained by the continuous demand for funds due to the increase in housing transactions, as well as the supply of policy loans for housing markets-through products like ‘Ditimdol’ and ‘Beopmo.’ Advance payment loans also increased by 5 billion won last month.”
“Park Min-cheol, a team leader at the Bank of Korea, stated, ‘The increase in housing transactions, especially in Seoul since May, has led to an increase in home sales, followed by household loan executions,’ and explained that the decrease in loan interest rates and the continuous supply of policy loans also had an impact. According to the Ministry of Land, Infrastructure, and Transport, apartment transactions nationwide, which were around 30,000 to 31,000 units in January and February, have been steadily increasing, reaching 40,000 units in March, 37,000 units in April, 39,000 units in May, and 43,000 units in June.”
Reporter Cha Jun-hong
“Park, the team leader, responded, ‘Due to the increasing trend in apartment transactions in Seoul in June, there is a possibility that the increase in household loans may further expand in the near future,’ and said, ‘We are closely monitoring the behavior of household loans in the banking sector.’ ”
“According to the ‘Household Loan Trends’ released by the Financial Services Commission and the Financial Supervisory Service on this day, total household loans across the entire financial sector, including banks and non-bank financial institutions, increased by 5.3 trillion won last month. The increase was greater than in June (+4.2 trillion won). Home-backed loans increased by a slightly lower 5.4 trillion won compared to the previous month (+6 trillion won), while credit loans and other loans decreased by 200 billion won. However, the decrease in other loans was smaller than in June (-1.8 trillion won). By sector, household loans increased by 5.5 trillion won in the banking sector but decreased by 200 billion won in non-bank financial institutions.”
“An official from the financial authorities stated, ‘There is a considerable concern that the growth of household loans will expand in August as a result of the increase in real estate transactions in the capital metropolitan area and the demand for funds during the vacation season.’ They also mentioned, ‘However, with the implementation of the 2nd stage stress Debt Service Ratio (DSR) from the next month and the initiation of calculating the DSR for all household loans in the banking sector for management purposes, we will induce the financial sector to manage household debts vigilantly.'”
Changyong Lee, Governor of the Bank of Korea, speaking at a press conference on the direction of the monetary policy of the Monetary Policy Committee at the Bank of Korea in Jung-gu, Seoul on the 11th of last month. News1
“The Bank of Korea’s concerns are deep. The timing of lowering interest rates, which is currently being weighed, could potentially inflame housing prices and household mortgages. The Bank of Korea is facing pressure for significant interest rate cuts due to the continuation of weak domestic demand. The Korea Development Institute (KDI) recently revised down this year’s economic growth rate forecast from the original 2.6% to 2.5%, warning that private consumption and investment recovery are being delayed under prolonged high-interest conditions.”
“Changyong Lee, Governor of the Bank of Korea, emphasized at a press conference of the Monetary Policy Committee last month, ‘I will not make the mistake of giving the market wrong signals by lowering interest rates at the wrong time, which could stimulate inflation and the real estate market.’ The Bank of Korea is set to announce the benchmark interest rate decision at the Monetary Policy Committee meeting on the 22nd.
“Measures by banks to curb household loan demand have also been intensified. Shinhan Bank will raise home-backed loan rates, including advance payment loans, by a maximum of 0.5% from the 16th. Home-backed loan rates will increase by 0.30-0.35% depending on the maturity, and advance payment loans will also be adjusted upward by 0.20-0.35% by guarantors and maturity. Shinhan Bank had raised mixed rates by 0.05% on the 15th and 22nd of last month, and increased home-backed loan rates by up to 0.3% on the 29th. Since the rate hike on the 7th of this month, Shinhan Bank has increased loan rates five times in just one month.”