S. Korea’s household loans surge by ₩9.8t in August 

South Korea’s household loans across all financial sectors surged by KRW9.8 trillion in August 2024, sharply increasing from the KRW5.2 trillion rise in July. This growth primarily resulted from a KRW8.5 trillion increase in mortgage loans, up from KRW5.4 trillion the previous month, driven largely by robust housing market activity in the Seoul metropolitan area. Other types of loans also rose by KRW1.3 trillion, reversing previous declines.

Banks saw a substantial increase of KRW9.3 trillion in household loans, up significantly from KRW5.4 trillion in July, mainly due to a rise in mortgage loans, which grew by KRW8.2 trillion compared to KRW5.6 trillion the previous month. The nonbanking sector also rebounded, with mortgage loans up by KRW0.3 trillion and other loans up by KRW0.2 trillion.

The notable rise in household loans in August reflects strong housing market transactions, high demand before the implementation of the second phase of the stressed Debt Service Ratio (DSR) rule, and increased stock investment demand. Authorities anticipate a slowdown in household debt growth with the DSR rule set to take effect in September but will continue to monitor the market closely and are ready to implement additional measures if necessary to ensure financial stability.

Attribution: South Korea Ministry of Economy and Finance report 

Subediting: M. S. Salama