South Korea Sees Over 100-Fold Increase in Credit Loans vs. Mortgages Amid Investment Boom

In South Korea, credit loan balances at major commercial banks surged dramatically in May, exceeding mortgage loan increases by more than 100 times. This trend is largely attributed to a rise in "debt-to-invest" (bitu) activities, especially through revolving credit facilities, as the KOSPI stock index consistently broke previous records.

According to data from five major banks (KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup), the total balance of individual credit loans reached 106.9909 trillion won as of May 28. This represents a 2.5% increase, or 2.6496 trillion won, from the end of April. This marks the largest monthly increase in credit loans in five years and one month, since April 2021, when the balance grew by 6.8401 trillion won. The current credit loan balance is also the highest since November 2023.

The growth in credit loans was primarily concentrated in revolving credit lines. The balance for these lines across the five banks increased by 2.1426 trillion won from 39.7877 trillion won at the end of April to 41.9303 trillion won by May 28. This is the first time the balance has grown by over 2 trillion won in a single month since April 2021. Typically, revolving credit balances decrease around the 25th of the month due to salary payments, but in May, the balance actually increased by approximately 650 billion won in the week leading up to the 25th, suggesting individuals borrowed more rather than repaying loans with their salaries.

This sharp rise in credit loans stands in stark contrast to mortgage loans. As of May 28, the balance for mortgage loans at the five banks was 612.2693 trillion won, an increase of only 25 billion won from the end of April. When comparing the increase over the month of May alone, credit loans grew more than 100 times larger than mortgage loans. Overall household debt balances increased by nearly 3 trillion won in May, reaching 770.2728 trillion won, the largest monthly increase since August of the previous year.