South Korea Sees Slower Growth in Household Loans

Seoul, July 13  – Household loans from South Korea’s top five banks went up in the first 10 days of July, but the growth has slowed down a lot. This comes as the government works harder to control rising household debt.

As of July 11, the total household loans from major banks like KB Kookmin Bank and Shinhan Bank reached 755.7 trillion won (about US$547.8 billion). That’s an increase of 891.2 billion won from the end of June.

This means loans grew by about 89.1 billion won per day during the first 10 days of July. In June, the daily increase was much higher — 225.1 billion won per day.

If this trend continues, total household loans are likely to rise 2.76 trillion won in July, far less than the 6.75 trillion won increase seen in June.

Breaking it down:

• Home-backed loans (loans secured by property) increased by 1.38 trillion won to 600.8 trillion won.

• Unsecured loans (loans without collateral) dropped by 137.7 billion won, reversing a 1.09 trillion won rise in June.

Experts say this slowdown is likely due to new government rules aimed at cooling the hot housing market in Seoul. The new lending cap limits mortgage loans for home buying in the capital region to 600 million won.

At the same time, the Bank of Korea (BOK) has decided to keep its interest rate unchanged at 2.5%, taking a cautious stance due to ongoing economic challenges. These include:

• High home prices

• Rising household debt

• Trade uncertainty, especially due to the United States’ new tariff policies

The central bank’s decision follows a rate cut in May, when it reduced the rate by 25 basis points to support the economy amid weak domestic demand.

Analysts say the combination of debt control measures and stable interest rates is likely to help slow the rapid rise in household borrowing and housing prices.