Seoul: Household loans from South Korean banks rose for the second month in a row in March, as revealed by central bank data on Wednesday. This trend occurred amid rising housing prices in southern Seoul's affluent areas following governmental deregulation initiatives.
According to Yonhap News Agency, the Bank of Korea (BOK) reported that banks' outstanding household loans reached 1,145 trillion won (approximately US$774.12 billion) by the end of March, marking an increase of 1.4 trillion won from the previous month. While this represented the second consecutive month of growth, the increase was slower compared to February's 3.2 trillion won surge.
The rise in March was attributed to banks easing certain regulations at the start of the year, coupled with increased loan demand during the moving season. In mid-February, Seoul's municipal government also relaxed the land transaction permission scheme in some of the city's wealthier districts.
However, due to a sharp uptick in real estate prices in these areas, the city government reinstated the scheme, tightening property market regulations. This move required prior approval from local authorities for any apartment transactions.
Home-backed loans increased by 2.2 trillion won from the previous month, totaling 909.9 trillion won by the end of March. This was a slowdown from February's growth of 3.4 trillion won. Meanwhile, unsecured or other types of loans to households decreased by 900 billion won to 234.2 trillion won during the same period.
Corporate loans experienced a decline of 2.1 trillion won from the previous month, amounting to 1,324.3 trillion won in March. This marked the first on-month drop in three months, driven by weak demand amid uncertain business conditions, tighter lending regulations, and companies' efforts to manage financial ratios at the end of the first quarter, according to the BOK.
Data from the Financial Supervisory Service (FSS) indicated that household loans across all financial institutions increased by 0.4 trillion won last month compared to February's 4.2 trillion-won gain. Home-backed loans from all financial institutions, including savings banks and insurance firms, rose by 3.4 trillion won from the previous month, a slowdown from the 4.9 trillion-won increase seen in February. Other types of loans to households declined by 3 trillion won last month, compared with a 0.7 trillion-won decrease in the previous month.