Household Loan Increments Increased by 80% in June

The amount of household loans showed a rapid increase in June on the expectations of housing market deregulation characterized by LTV and DTI adjustment.

The Financial Supervisory Service announced on July 31 that the amount soared by 3.6 trillion won (US$3.5 billion) to 487.7 trillion won (US$471.9 billion) in that month. The household loan amount had increased by 2 trillion won (US$1.9 billion) in the previous month, and the monthly total hit a 12-month high in June.

The rapid growth was led by mortgage loans, the sum of which had decreased by 700 billion won in January, but went up by 1.3 trillion won (US$1.2 billion) in February, 1.6 trillion won (US$1.5 billion) in March, 2.6 trillion won (US$2.5 billion) in April, 1.9 trillion won (US$1.8 billion) in May, and 3.1 trillion won (US$3.0 billion) in June. The increment had been as high as 3.9 trillion won (US$3.8 billion) in June last year. The figures can be interpreted as a rising home purchase demand in the wake of the announcement on housing market deregulation.

Meanwhile, the business loan amount plummeted. The increment was limited to 700 billion won (US$677 million) in June. Loans borrowed by major corporations declined by 1.4 trillion won (US$1.3 billion) due to seasonal factors, including the debt ratio management of late last year, while those provided for small and midsize enterprises increased by 2.1 trillion won (US$2.0 billion).