Household loans rebound after monthslong decline

Household loan balances at major Korean banks climbed back above year-end levels in June, erasing an early-year dip, as borrowers took out more credit for stock investments and to finance home purchases, data showed Sunday.

Outstanding household loans at five major lenders — KB Kookmin Bank, Shinhan Bank, Hana Bank, Woori Bank and NH Nonghyup Bank — stood at 646.02 trillion won ($422.8 billion) as of Thursday, up 824.1 billion won from the end of last year. The total excludes policy-backed mortgage products. The swing follows months of narrowing losses, according to data compiled by the banks.

Household loan balances had fallen by 5.86 trillion won by the end of March from year-end levels, as borrowers repaid debt amid tighter regulations on new loans.

The pace of decline slowed, with the amount narrowing to 5.25 trillion won at the end of April and to 1.57 trillion won at the end of May. The trend reversed in June, with loan balances returning to growth.

The increase in borrowing was driven largely by unsecured credit loans, as investors borrowed more funds to capitalize on a rally in the stock market.

Outstanding credit loans totaled 108.33 trillion won as of Thursday, up nearly 4 trillion won from 104.3 trillion won at the end of April.

Rising home prices and increased home transactions also fueled demand for borrowing.

Outstanding mortgage loans at the five banks climbed to a record 614.53 trillion won as of Thursday, up 1.15 trillion won from the end of May.

Yonhap