First Decline in Household Loans in a Decade

In a significant development for South Korea's financial sector, household loans have decreased by 900 billion won in January, marking the first decline in 10 months. This shift, the first since March of the previous year, is attributed to growing domestic and international uncertainties and a slowdown in housing transactions.

Banking Sector Sees Notable Reduction

Within the banking sector, household loans decreased by 400 billion won, with mortgage loans dropping by 600 billion won. Despite a narrower reduction compared to the previous month, other loans, including credit loans, saw a substantial decrease of 4.2 trillion won, counterbalancing the 3.3 trillion won increase in mortgage loans.

Secondary Financial Sector Hard Hit

The secondary financial sector experienced a dramatic shift, with loan amounts falling from a positive 2.4 trillion won in December to a negative 500 billion won in January. Mutual financial institutions and insurance companies led the decline, with reductions of 200 billion won and 500 billion won, respectively.

The Financial Services Commission anticipates a potential increase in household debt from February, citing the start of business operations and moving demand. They remain committed to closely monitoring the local capital supply and the dynamics of housing supply and construction investment.