Household loans from South Korean banks fell for a second straight month in January amid tightened lending rules to stabilize the housing market. The outstanding balance stood at 1,172.7 trillion won at the end of January, down 1 trillion won from December. This decline reflects government responses to surging home prices in Seoul and the greater metropolitan area.
Data from the Bank of Korea (BOK) showed that outstanding household loans from South Korean banks stood at 1,172.7 trillion won (US$805.75 billion) at the end of January, down 1 trillion won from a month earlier. This marked the second consecutive monthly decline, following the first drop since January 2025 in December.
Home-backed loans decreased by 600 billion won in January, after a 500 billion-won fall the previous month. Unsecured and other household loans fell by 400 billion won on-month, a narrower decline compared to the 1.5 trillion-won drop in December.
According to the Financial Supervisory Service (FSS), household loans from all financial institutions, including savings banks and insurers, rose by 1.4 trillion won in January, reversing a 1.2 trillion-won decrease in December. Mortgage loans increased by 3 trillion won, up from a 2.3 trillion-won gain the prior month.
The government has imposed stricter loan and home purchase regulations in response to rising housing prices in Seoul and parts of the greater metropolitan area. A BOK official said, "Banks have continued efforts to manage lending in line with government guidelines, while demand for 'jeonse' loans has slowed." The official added, "Despite inflows of early-year bonuses, other loans posted only a marginal decline amid increased domestic and overseas stock investment."
Jeonse is a unique South Korean rental system where tenants deposit a large lump sum returned at lease end.
In contrast, corporate loans rose by 7.8 trillion won to 1,369.6 trillion won, accelerating from a 5.7 trillion-won increase in December.
The BOK official noted, "Household loan growth could accelerate and become more volatile in February, as financial institutions begin full-scale operations in the new year and demand for moves ahead of the new school year increases," reaffirming ongoing market monitoring.
