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Household loan growth continues in October, but rental loans still abound

Published: 30 Oct. 2024, 17:47

Financial Services Commission Chairman Kim Byoung-hwan speaks during a press conference in Seoul on Wednesday. [YONHAP]

Household loan growth continued in October, rising slightly higher than the previous month, the country's chief regulator said Wednesday, adding that it is unclear whether tightened curbs on loans for renters would be implemented this year.

Financial Services Commission (FSC) Chairman Kim Byoung-hwan told reporters that the final data is being compiled and any measures aiming to curb household loans will be reviewed later.

“We see that household loan growth (in October) was a bit higher than September, but we don't expect any gains to be high,” Kim said.

He noted that the nonbanking sector extended more household loans this month than it did in the previous month.

Data showed that household loans extended by banks in Korea rose for the sixth straight month in September, led by an increase in mortgages.

Banks' outstanding household loans also increased 5.7 trillion won ($4.13 billion), marking a sharp deceleration from their 9.2 trillion won gain in August, the highest on-month increase in 37 months.

Banks' home-backed loans increased 6.2 trillion won from a month earlier to 896.8 trillion won in September, also slowing from an 8.2 trillion won rise, the highest on-month increase in the country's history.

Policymakers have blamed a recent rise in home prices, especially in the Seoul metropolitan area, for the sharp increase in mortgages.

Earlier this month, the Bank of Korea slashed its benchmark rate by a quarter percentage point to 3.25 percent for the first time in 38 months amid slackening domestic demand and moderating inflation.

But the FSC chief said it is unclear whether tightened curbs on loans for jeonse will take effect this year. Jeonse refers to a unique Korean system in which renters give landlords a large returnable deposit instead of paying monthly rent.

Yonhap