A visitor to a showroom for a new apartment complex looks at miniature apartments. (Yonhap)
The amount of credit loans taken out by individuals sharply increased in June due to the government’s tough regulations on mortgage loans and the recent stock market rallies.
According to data released by the Financial Services Commission and the Financial Supervisory Service on Friday, the entire outstanding balance of credit loans at commercial banks and savings banks totaled 3.5 trillion won ($2.9 billion) last month. The amount of loans extended at commercial banks last month, standing at 3.1 trillion won, was the largest since March this year when it reached 3.3 trillion won.
The number of credit loans newly approved by South Korea’s top five commercial banks—Shinhan Bank, KB Kookmin Bank, Hana Bank, Woori Bank, and NH Bank—reached more than 180,000.
“Because of the government’s strict rules on mortgage loans in line with its tough real estate policy, some home owners and buyers may have chosen to take out credit loans instead of mortgages,” said an official from a financial sector. “Low interest rates also may have made borrowing money from banks more attractive.”
The financial authorities said that they would continue to closely monitor the growth of credit loans in order to maintain household debt at a stable level.
The bullish stock market in recent weeks is also thought to have lured money from individual investors, which has led to the growth of credit loans. On June 5, credit loans for stock investment by individuals reached 11.47 trillion won, the highest since Oct. 11, 2018, according to data from the Korea Financial Investment Association.
By Kim Young-won (firstname.lastname@example.org)