A panoramic view of downtown Seoul as seen from Inwangsan Mountain. (Yonhap)
SEOUL, Oct. 16 (Korea Bizwire) — Household lending in South Korea grew at its slowest pace in six months in September, new data showed Thursday, as tougher regulations and seasonal factors cooled borrowing amid renewed efforts to rein in housing prices and rising household debt.
According to the Bank of Korea, household loans extended by banks rose by just 2 trillion won ($1.5 billion) last month, bringing the total to 1,170.2 trillion won ($825 billion). That marked a sharp slowdown from a 4.1 trillion-won increase in August and the weakest growth since March.
Mortgage loans rose 2.5 trillion won to 932.7 trillion won, compared with a 3.9 trillion-won gain the previous month, while unsecured and other household loans fell by 500 billion won to 236.6 trillion won.
A separate report from the Financial Supervisory Service showed that loans from all financial institutions, including savings banks and insurers, climbed 1.1 trillion won in September — one-fourth of August’s growth.
This image shows information on a bank’s loan programs on the exterior of a lender in Seoul. (Yonhap)
“The impact of lending regulations persisted, while seasonal factors reduced demand for jeonse financing,” a Bank of Korea official said, referring to South Korea’s lump-sum housing deposit system. “Reduced credit loan limits also contributed to the decline.”
The slowdown comes as the government intensifies efforts to curb surging housing prices. In late June, authorities capped mortgage loans for homes in the capital region at 600 million won and suspended home-backed lending for multiple homeowners.
On Wednesday, all 25 districts of Seoul were designated “speculative zones,” triggering even stricter mortgage limits — as low as 200 million won in some cases.
Apartment prices in Seoul, particularly in neighborhoods along the Han River, have climbed steadily in recent months, testing the new administration of President Lee Jae Myung, which has made housing affordability a key policy priority.
Luxury rental prices in Seoul have surged, with a growing number of apartments commanding monthly rents exceeding 10 million won ($6,900). (Image courtesy of Yonhap)
Corporate lending also decelerated, with loans rising 5.3 trillion won in September, down from an 8.4 trillion-won increase in August. Total outstanding corporate loans stood at 1,360.1 trillion won at the end of the month, the data showed.
The figures underscore how South Korea’s policymakers are struggling to strike a balance between containing household debt — now among the highest in the world relative to GDP — and preventing a sharper slowdown in the property market, a key driver of the domestic economy.
M. H. Lee (mhlee@koreabizwire.com)
