Household Loans Surge 6 Trillion Won in a Month as Debt-Financed Investing Revives
Household loans grew sharply last month for the first time in a month, driven by an increase in so-called 'debt-financed investing,' where individuals borrow to invest in stocks. According to household loan data released by the Financial Services Commission and the Financial Supervisory Service on the 11th, household loan balances across the financial sector, including banks, increased by 6.4 trillion won from the previous month, reversing to growth a month after falling by 2.2 trillion won in September. Both mortgage loans and other loans increased.
By loan type, mortgage loans rose by 4 trillion won, a wider increase than the previous month's 3.2 trillion won gain. Other loans, which had fallen by 5.4 trillion won in September, grew by 2.4 trillion won last month, turning positive for the first time in two months. Within other loans, credit loans swung from a 2.9 trillion won decrease in September to a 1.2 trillion won increase last month.
Growth also widened across financial sectors. Bank household loans increased by 5 trillion won in a month, far exceeding the previous month's increase of 500 billion won. Household loans in the non-bank sector shifted from a 2.7 trillion won decrease in September to a 1.4 trillion won increase last month.
According to the Bank of Korea, household loan balances at deposit banks (including policy mortgage loans) stood at 1,203.9 trillion won at the end of October, up 5 trillion won from the previous month. This was the first time deposit-bank household loan balances exceeded 1,200 trillion won. Mortgage balances rose by 3.3 trillion won to 958.7 trillion won, while other loans, which had fallen by 2.3 trillion won in September, grew by 1.7 trillion won, returning to growth after two months.
"Individual mortgage loans remained at a similar level to the previous month, while group lending expanded in October," explained Lee Seung-yup, deputy director of the Bank of Korea's market overview team. Regarding other loans, he added, "Net purchases of stocks by individual investors appear to have influenced the increase in credit loans."
