KB Kookmin Bank has restricted new in-person applications for home purchase mortgage loans scheduled for execution this year since November 24. The photo shows the in-person service counters at KB Kookmin Bank’s Yeouido branch in Seoul. (Yonhap)
SEOUL, Dec. 10 (Korea Bizwire) — Household borrowing from South Korean banks grew at a slower pace in November as tighter mortgage regulations began to cool the heated property market in the Seoul metropolitan area, according to new data released Wednesday by the Bank of Korea.
Outstanding household loans came to 1,175.6 trillion won ($799.6 billion) at the end of November, up 1.9 trillion won from October. The increase marked a notable deceleration from the 3.5 trillion-won jump recorded a month earlier, reflecting the impact of stricter lending rules introduced this fall.
Mortgages — which make up the bulk of household borrowing — rose 700 billion won in November to 935.5 trillion won, down sharply from the 2 trillion-won gain in October and the slowest monthly increase since March 2023. Other consumer loans, including unsecured lending, climbed 1.2 trillion won to 239.2 trillion won, also slightly weaker than the previous month.
“Mortgage loans grew at a slower clip despite increased housing transactions ahead of the Oct. 15 measures,” the central bank said, noting that commercial lenders continued to tighten credit screening and that demand for loans tied to Korea’s jeonse rental system had softened.
Under the October measures, the government designated 21 additional districts in Seoul as speculative zones, meaning all 25 districts in the capital are now subject to heightened loan restrictions, including mortgage limits that can fall to as low as 200 million won.
Jeonse — a uniquely Korean rental arrangement in which tenants make a large lump-sum deposit instead of monthly rent — has historically contributed to mortgage demand when deposits are financed through bank loans.
The photo shows residential houses and apartment complexes in Seoul, as seen from Namsan in Jung-gu, Seoul. (Image courtesy of Yonhap)
Despite the slowdown in mortgage growth, unsecured and personal loans have continued to expand at a brisk pace, buoyed in part by a surge in retail stock investing. The benchmark Kospi index has gained nearly 70 percent this year, boosted by a revival in the semiconductor market, growing enthusiasm for artificial intelligence, and regulatory reforms that have drawn foreign inflows.
Data from the Financial Supervisory Service, which tracks lending across all financial institutions including insurers and savings banks, showed a similar trend. Household loans across the broader financial system rose 4.1 trillion won in November, down from a 4.9 trillion-won increase in October. Mortgage lending rose 2.6 trillion won, compared with 3.2 trillion won the prior month.
“Overall, the pace of home price increases in the greater Seoul area has been moderating,” Park Min-cheol, a Bank of Korea official, said at a briefing. “In some core districts of Seoul, however, the slowdown has been more gradual, so continued monitoring is necessary.”
Apartment transactions in Seoul dropped sharply after the October measures, Park added, though neighboring Gyeonggi Province and the port city of Incheon have seen less of a decline as demand spilled over from the capital — a “ballooning effect” that has helped sustain upward pressure on housing-related borrowing.
Corporate borrowing moved in the other direction last month, growing 6.2 trillion won, compared with a 5.9 trillion-won rise in October. Outstanding corporate loans reached 1,372.2 trillion won at the end of November, the central bank said.
Ashley Song (ashley@koreabizwire.com)
