Visitors to Seoul’s Namsan Observatory look out over a cityscape packed with apartment buildings. (Yonhap)
SEOUL, Jan. 14 (Korea Bizwire) — Household lending by South Korean banks declined in December for the first time in nearly a year, signaling the early impact of tighter government controls aimed at cooling an overheated housing market in the Seoul metropolitan area.
Outstanding household loans at banks totaled 1,173.6 trillion won ($795 billion) at the end of December, down 2.2 trillion won from the previous month, according to data released Wednesday by the Bank of Korea. It was the first monthly contraction since January 2025.
Mortgage lending fell 0.7 trillion won in December, reversing a 0.8 trillion-won increase in November and marking the first decline since February 2023. Unsecured and other household loans dropped 1.5 trillion won, following a 1.2 trillion-won rise a month earlier.
Across all financial institutions, total household lending declined 1.5 trillion won, even as mortgage loans continued to rise by 2.1 trillion won—slowing from a 3.1 trillion-won increase in November.
Apartment buildings densely fill the cityscape as seen from Seoul’s Namsan Observatory. (Yonhap)
For the full year, household loans grew by 37.6 trillion won, down from a 41.6 trillion-won increase in the previous year, underscoring a gradual deceleration in credit expansion.
The pullback follows a series of regulatory measures announced in mid-October, when the government designated all 25 districts in Seoul as speculative zones and tightened lending standards. Under the new rules, mortgage loan caps were lowered to as little as 200 million won in some areas.
Corporate lending also retreated in December, falling 8.3 trillion won after a 6.2 trillion-won increase in November. Outstanding corporate loans stood at 1,363.9 trillion won at year-end, the central bank said.
The data come as the central bank is widely expected to hold its benchmark interest rate steady at 2.5 percent this week, as policymakers balance support for the weakening won against efforts to stabilize the property market. The bank has kept rates unchanged for four consecutive meetings through November, even after beginning a monetary easing cycle in October 2024.
Customers conduct banking transactions at a bank branch in Seoul. (Yonhap)
Ashley Song (ashley@koreabizwire.com)
