Household loans grow slowest in 7 months in Sept. on tighter rules, higher rates

Banks extended household loans by the smallest amount in seven months in September, according to data released by the central bank on Thursday. Outstanding household loans held by banks totaled 1,198.9 trillion won ($895.5 billion) in the month, marking a 0.6 trillion won increase from the previous month, but a slowdown from the 3.5 trillion won rise seen in the prior month.

This figure represents the smallest increase since March of this year, when loans grew by 0.5 trillion won. Mortgage loans alone saw an increase of 2.9 trillion won on-month in September, bringing their total to 955.5 trillion won. However, other types of household loans experienced a decline, falling by 2.3 trillion won to 242.6 trillion won.

The central bank had raised its benchmark interest rate to 3 percent during two consecutive meetings in July and August, the first two consecutive rate hikes since January 2023, when the bank conducted seven consecutive rate increases starting in April 2022. Simultaneously, overall household loans issued by all financial institutions declined by 2.2 trillion won in September compared to the previous month.