Increase in Household Loans by 5 Major Banks Decreases by 60%... Possibility of Surge Remains

[Financial News] Due to the impact of the 6·27 loan regulations, real estate demand has contracted, resulting in a sharp decline in the increase in household loans by commercial banks. However, as applications for mortgage loans related to already contracted home sales were concentrated at the end of last month and are being approved sequentially, there are concerns that the increase in household loans may not easily subside until August-September. 
According to the financial sector on the 13th, the balance of household loans at the five major banks (KB Kookmin, Shinhan, Hana, Woori, NH Nonghyup) as of the 10th was 755.726 trillion won. This is an increase of 8.912 trillion won from the end of June (754.8348 trillion won). It increased by about 891 billion won per day on average, which is only 40% compared to June (2.251 trillion won).
If this trend continues, the increase in household loans by the end of this month is expected to be 2.76 trillion won. This is 40% of the previous month (6.7536 trillion won). 
Until last month, household loans increased significantly due to the combined demand for the last-minute rush related to interest rate cuts and the 3-stage stress total debt service ratio (DSR) regulation. In response, the government announced a policy on the 27th of last month to limit the mortgage loan (Jutamdae) limit in the metropolitan and regulated areas to 600 million won and to mandate actual residence within six months, effectively blocking 'gap investment', leading to a significant drop in loan demand. 
By type of household loan, the balance of mortgage loans (including jeonse loans) was 600.823 trillion won, an increase of 1.3773 trillion won in ten days compared to the end of June (599.425 trillion won). Credit loans decreased by 3.887 trillion won. Compared to last month's increase of 10.876 trillion won, it has decreased significantly. 
However, it is pointed out that caution should not be relaxed as there are cases where there is no significant change or even an increase in the trend of loan application approvals by banks, which is a leading indicator of household loan execution. 
From the beginning of this month to the 10th, the number and amount of mortgage loan application approvals (based on completion of review after document submission) at Bank A were 3,723 cases and 1.035 trillion won, respectively, with an average of 372 cases and 135.5 billion won approved per day. Last month, there were a total of 8,790 cases and 2.2399 trillion won, with a daily average of 293 cases and 746.6 billion won. The total daily approval amount of mortgage loans at Bank B during the same period (1.466 trillion won) also exceeded that of the previous month (133 billion won).
The Bank of Korea also recently reported to the National Planning Committee that "there is a possibility of a surge in household loans in August-September due to the impact of the overheated housing market."
Another variable is that mortgage loans or non-face-to-face credit loans, which were blocked for up to half a month from the end of last month, are set to resume in earnest from this week with the completion of the computer system overhaul.
In the case of KB Kookmin Bank, applications for mortgage loans for home purchase contracts after June 28 began to be accepted again from 9 a.m. on the 11th through both face-to-face and non-face-to-face channels. Shinhan Bank plans to resume non-face-to-face mortgage loan sales on the 16th. Non-face-to-face applications for credit and jeonse loans are currently possible. Nonghyup Bank plans to resume non-face-to-face mortgage loan sales from the 18th. Non-face-to-face credit loan sales began on the 8th.

zoom@fnnews.com Lee Jumi Reporter