Seoul, Nov 13 – In a surprising twist, South Korean banks added more household credit in October, even as regulators tightened lending rules. Bank of Korea data released Thursday show that total household loans climbed to 1,173.7 trillion won (about $799 billion) by the end of the month, a jump of 3.5 trillion won from September.
The uptick in borrowing slows the pace of mortgage growth. Home‑backed loans reached 934.8 trillion won, up 2.1 trillion won from the month before, after a 3.9 trillion‑won rise in August. This dip reflects a decline in the jeonse rental market and fewer property sales in July and August, according to a Bank of Korea spokesperson.
“Credit and other loans went up mainly because investors were funding domestic and overseas stocks, pre‑purchasing homes before October’s new housing rules, and borrowing surged during the Chuseok holiday,” the spokesperson added.
The trend of taking out credit for stock purchases is linked to a strong rally in the Korean market. The KOSPI index has surged roughly 70 percent this year, driven by government‑led market reforms and optimism around the AI boom.
Financial Services Commission Chairman Lee Eok‑won called for sound risk management during a press briefing, noting that the recent jump in credit loans has not yet threatened overall household debt levels or financial stability.
Corporate borrowing also rose, with outstanding corporate loans hitting 1,366 trillion won at the end of October—an increase of 5.9 trillion won from September, up from a 5.3 trillion‑won gain earlier.
Policymakers are watching apartment transactions in Seoul, which bounced back to about 86,000 sales in September from roughly 41,000 in July and August. In response to a heated housing market and rising household debt, the government rolled out new measures last month. Eleven extra districts in Seoul were added to the speculative zone list, bringing the capital’s total to 25 districts under stricter rules. The government also tightened mortgage caps, lowering the maximum loan amount to as little as 200 million won.
These developments illustrate how South Korea’s financial landscape is shifting amid a stock‑market boom and tighter housing‑loan rules.
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