Did Borrowers Rush in Before the Capital Gains Tax Deferral Ended? Mortgage Lending Rises by 5.5 Trillion Won in April

Mortgage lending across the financial sector rose by 5.5 trillion won last month. That was 2 trillion won more than in March, when it increased by 3 trillion won, and the highest level in eight months since August last year, when it rose by 3.8 trillion won. The surge is seen as reflecting a wave of bargain sales ahead of the end of the tax deferral on heavier capital gains taxes for multi-homeowners on the 9th.
The financial authorities view the rebound in banks' own mortgage lending as a potential risk, even though lenders have raised borrowing thresholds under tighter household loan management targets.
According to the Financial Services Commission (FSC) on the 17th, the total increase in household loans across the financial sector in April came to about 3.5 trillion won, roughly unchanged from the previous month.
Bank mortgage lending led the overall increase, rising by 2.7 trillion won from the previous month to push total mortgage growth to 5.5 trillion won. Bank mortgage lending turned negative in December last year and remained weak in January this year. It rose by 300 billion won in February, was flat in March, and then jumped sharply in April.
Banks' own mortgage lending shifted from a 1.5 trillion won decline to a 1.3 trillion won increase. Policy loans edged down from 1.5 trillion won to 1.4 trillion won, while other loans reversed from a 500 billion won increase to a 600 billion won decline. In the case of other loans, unsecured lending fell sharply from a 500 billion won increase to a 600 billion won decrease. At NBFIs, the pace of growth also slowed, from 3 trillion won to 2.8 trillion won.
The increase is attributed to stronger housing transactions and rising demand for interim payments ahead of the end of the tax deferral for multi-homeowners. Apartment sales in the Seoul metropolitan area have remained in the 20,000-unit range this year, at 22,000, 20,000 and 23,000 units. Apartment sales in Seoul have also climbed from 3,400 units in November last year to more than 5,000 units this year.
The financial authorities plan to strengthen monitoring, including whether banks are meeting separate mortgage management targets, to prevent mortgage lending from fueling the housing market. Shin Jin-chang, Secretary General of the Financial Services Commission, said, "Household loan growth from January to April this year has been managed stably within the annual target range." He added, "However, potential risk factors remain, including the delayed impact of the rise in housing transactions in the first quarter, so all financial institutions should remain especially vigilant and do their utmost to ensure stable management of household debt."
gogosing@fnnews.com Park So-hyun Kim Tae-il Reporter