South Korea household loan balances increased in July, but the pace of growth slowed as new debt restrictions took effect. Financial authorities are working to cool rising debt levels and curb speculative buying in the housing market.
The total outstanding loans from five major banks, including KB Kookmin Bank and Shinhan Bank, reached 755.7 trillion won ($547.8 billion). This figure reflects a rise of 891.2 billion won from the end of June. Despite the increase, the daily average growth rate dropped compared to previous months.
From July’s first 10 days, loans grew by 89.1 billion won per day. This is less than half of June’s daily average of 225.1 billion won. If this trend continues, household loans may rise by only 2.76 trillion won for July. That would mark a sharp drop from the 6.75 trillion won increase seen in June.
The slowdown in South Korea’s household loan growth comes as financial regulators enforce tighter debt control measures. New rules cap mortgage lending for home purchases in the Seoul capital region at 600 million won. Authorities expect these policies to ease pressure in the overheated housing market.
Home-backed loans rose by 1.38 trillion won during the first 10 days, bringing their total to 600.8 trillion won. In contrast, unsecured loans fell by 137.7 billion won, reversing a 1.09 trillion won gain from June. This shift highlights changing borrowing behavior under stricter rules.
Industry experts believe buyers are adjusting their plans due to the lending limits. Lenders are also adopting cautious policies to align with government targets for controlling household debt. Many expect loan growth to remain moderate as interest rates stay high.
The South Korea household loan slowdown signals that government measures are starting to impact the market. Analysts predict further easing of growth as banks prioritize risk management and financial stability. This shift reflects broader efforts to maintain balance in the country’s financial system.
Banks are likely to continue focusing on quality over quantity in issuing new loans. Borrowers may also see tighter screenings and more conservative lending practices in the coming months.
