Household Loans in South Korea Show a Slowing Growth in November

According to the Financial Services Commission's announcement on December 11, household loans in South Korea experienced a notable increase of 5.1 trillion won in November. This growth rate, however, has slowed down compared to the previous month's rise of 5 trillion won. The shift in loan demand from banks to non-bank financial institutions has intensified the 'balloon effect,' where restrictions in one sector lead to heightened activity in another.

Bank Sector Sees a Significant Decline in Loan Growth

The slowdown in household loan growth can be largely attributed to the bank sector's limited increase of 1.9 trillion won in November, a sharp decline from the 3.8 trillion won increase observed in October. Notably, the growth rate of mortgage loans within the bank sector decreased by more than half, from 3.6 trillion won in October to 1.5 trillion won in November. When considering only the bank's own mortgage loans, there was a decrease of 800 billion won in November.

Non-Bank Financial Institutions Step Up Amidst Bank Sector's Decline

In contrast, loans from non-bank financial institutions saw a more substantial increase of 3.2 trillion won in November, compared to the 2.7 trillion won rise in the previous month. This surge was driven by individuals who were unable to secure loans from banks turning to non-bank financial institutions. Mortgage loans from these institutions increased by 2.6 trillion won. By sector, mutual finance experienced an increase of 1.6 trillion won, while insurance companies, specialized credit finance companies, and savings banks saw increases of 600 billion won, 600 billion won, and 400 billion won, respectively.