Tighter policies drag South Korean household loan growth in September

Banks have supposedly stepped up their efforts to manage household debt.

Household loans in South Korea grew at a slower pace in September as tighter lending regulations began to bite.

The outstanding balance of household loans rose by $3.82b (KRW5.2t) in September 2024, according to data from the Financial Supervisory Service (FSS). This is slower than in August, when the balance grew by $7.12b (KRW9.7t).

Tighter lending regulations on the back of the second phase of the stressed DSR rule contributed to the slowdown, according to the FSS.

Banks have also reportedly stepped up their efforts to manage household debt.

“However, as household loans continue to grow at high rates and considering the effects of seasonal factors, such as the Chuseok holiday, authorities will continue to stay vigilant to ensure stable management of household debt,” the FSS said in a press release.

Home backed mortgage loans and mortgage loans in the banking sector all registered slower growth as well.

Home backed mortgage loans rose by $5.07b (KRW6.9t) in September, lower than the $6.24b (KRW8.5t) increase a month earlier.

Other types of loans registered declines in September: banking loans were $367.08m (KRW0.5t) lower, whilst non-banking loans were $880.98m (KRW1.2t) lower.

(US$1 = KRW1,362.10; as of 16 October 2024, 11AM)