South Korean banks see household loans jump nearly 3 trillion won in June amid rush before tighter rules

Household loans at South Korea's five largest commercial banks have surged by nearly 3 trillion won (approximately $2.1 billion) in June alone, as of the 19th. This significant increase is occurring amidst tightening household debt management measures by financial authorities, prompting banks to impose stricter limits on credit loans. The trend suggests a rush of last-minute demand from individuals seeking to secure loans before lending conditions become more restrictive. Individually, credit loans from these five banks, KB Kookmin, Shinhan, Hana, Woori, and NH NongHyup, rose by 1.178 trillion won to reach 107.69 trillion won. This growth is fueled by a booming stock market, with the KOSPI index exceeding 9,000 points, driving demand for investment through borrowed funds, often referred to as 'bitu' (debt-to-invest). Meanwhile, mortgage loans from the same banks increased by 1.587 trillion won, bringing the total to 614.97 trillion won. Internet banks have also experienced a rapid rise in household lending. As of June 10, Kakao Bank, K Bank, and Toss Bank collectively held 75.38 trillion won in household loans, an increase of 619.4 billion won from the end of May. Their credit loans alone surpassed 30 trillion won, growing by 486.2 billion won in the first ten days of June. In response to these trends and regulatory guidance, commercial and internet banks are tightening their lending policies. Woori Bank, for instance, will limit new credit loan applications if daily reception numbers exceed internal management standards and will cap individual credit loans at 100 million won starting June 26. The limit for overdrafts will be halved to 50 million won. Other banks like KB Kookmin, Shinhan, Hana, and NH NongHyup have also implemented similar restrictions on loan amounts and overdraft facilities, with some, like K Bank, temporarily halting new sales of overdraft products.