Seoul: Household loans extended by South Korean banks grew at a slower pace in July compared to the previous month, following a series of policy measures aimed at curbing rising housing prices and household debt, central bank data showed Wednesday. Banks' outstanding household loans stood at 1,164.2 trillion won (US$841.18 billion) as of end-July, up 2.8 trillion won from a month earlier, according to the data from the Bank of Korea (BOK).
According to Yonhap News Agency, the July tally marks a deceleration from a 6.2 trillion-won gain the previous month, which represented the largest on-month increase since August 2024. It was also the slowest growth since March. The slower growth came as home-backed loans rose by 3.4 trillion won to 926.4 trillion won in July, slowing from a 5.1 trillion-won increase logged in June. Unsecured and other types of household loans fell by 600 billion won to 236.8 trillion won, compared with a 1.1 trillion-won increase the previous month, the data showed.
Since late June, authorities have imposed a 600 million-won cap on mortgage loans for property purchases in the capital region and suspended home-backed loans for multi-homeowners in an effort to rein in soaring housing prices. Tighter debt service ratio (DSR) regulations have also been applied to nearly all types of household debt since July. The measures were introduced following a surge in housing transactions, particularly in Seoul and surrounding metropolitan areas, which drove up both housing prices and household debt, as banks eased restrictions on household lending at the beginning of the year and the Seoul city government temporarily lifted its land transaction permit requirements.
Apartment transactions in Seoul jumped to 10,900 in June from the previous month's 7,400. In January, the figure stood at 3,300. Nationwide, the number of apartment contracts rose to 53,000 in June from 45,000 cases the previous month. "Household loans are declining more quickly than expected due to stricter regulations, but there is still considerable uncertainty over whether the downward trend will continue," BOK official Park Min-cheol told a press briefing. "Housing price growth in Seoul remains quite high, and concerns persist about potential spillover effects across other regions," he added.
Meanwhile, corporate loans went up by 3.4 trillion won from a month earlier in July, rebounding from a 3.6 trillion-won on-month decline in June. Outstanding corporate loans stood at 1,346 trillion won as of end-July, the data showed.