Top 5 Banks Exceed 'Other Loan' Targets by 2.4 Trillion Won in First Half

In the first half of this year, the increase in 'other loans' at the five major commercial banks exceeded targets by a staggering 2.4 trillion won, flashing a red light for household loan management. Critics point out that 'other loans'—referring to credit loans and other non-mortgage lending—surged, bypassing the banking sector's system for managing total household loan volumes. The increase in other loans at the five major banks (KB Kookmin, Shinhan, Hana, Woori, and NongHyup) reached 3.4658 trillion won in the first half, approximately 3.2 times the target (1.0924 trillion won). Woori Bank extended loans equal to 8.2 times its target, Hana Bank 8.9 times, Shinhan Bank 6.7 times, and KB Kookmin Bank about 2 times, while NongHyup Bank was the only one to record a net decrease of 252.5 billion won.

Conversely, mortgage loans showed an overall downward trend. KB Kookmin Bank reduced its balance by 1.3149 trillion won, and Woori Bank also cut 502.9 billion won. While Shinhan and Hana Banks reduced their amounts by 696.5 billion won and 226.9 billion won respectively, NongHyup Bank increased its balance by 1.6954 trillion won, already exceeding its annual household loan target.

To manage total household loan volumes, banks are beginning to tighten the relatively easier-to-control mortgage loans first. Following KB Kookmin Bank's reduction of its mortgage limit from 600 million won to 300 million won in early July, major banks have suspended loan applications or restricted mortgage loan insurance subscriptions. As the barrier for mortgages rose, demand shifted to credit loans. As of July 20, the outstanding balance of household credit loans at the five major banks stood at 109.6269 trillion won, an increase of 542.3 billion won compared to 10 days prior. With market rates rising following the Bank of Korea's rate hike and banks raising spread rates to manage volumes, the interest rate for 5-year fixed-rate mortgages at the five major banks rose to an annual 4.79~7.52%.

FSC Secretary-General Shin Jin-chang stated there are no plans to ease the household loan growth target of 1.5%. President Lee Jae-myung mentioned at a Cabinet meeting that the government would prepare measures to support actual demand along with real estate supply measures.