Bank Household Loans Surge in May, Fueled by Stock Investment Borrowing

Bank lending to households saw a substantial increase in May, with total loan balances rising by 6.9 trillion won to reach 1,181.8 trillion won. This marks the largest monthly expansion since August 2024, indicating a renewed surge in household borrowing.

The primary driver behind this growth was a significant jump in "other loans," which encompass stock-backed loans, general credit loans, and commercial property-backed loans. These "other loans" increased by 3.7 trillion won, the highest figure in over five years since April 2021, when corporate initial public offerings were booming. This surge is largely attributed to individual investors leveraging borrowed funds for stock market investments.

Mortgage lending also continued its expansion, following a period of slight decline in March. The increase in housing loans was attributed to rising housing transaction volumes, particularly in mid-priced properties in the Seoul metropolitan area. Additionally, demand for down payments on newly built apartments contributed to the growth in mortgage balances.

Corporate lending remained robust, with outstanding corporate loans increasing by 10.6 trillion won in May, a figure comparable to the previous month and significantly higher than the same period last year. Bank deposits also rebounded strongly, increasing by 48.8 trillion won after a decrease in April, largely due to large corporate deposits in current accounts. Investment trusts also saw substantial inflows, particularly into equity funds.