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Banks (Finance)

South Korean Banks' Home-Backed Lending Sees Significant Growth Amid Low Borrowing Costs

Strategic Insights

— 2 min read

The Bank of Korea (BOK) has reported that South Korean banks' home-backed lending saw a substantial increase in July, with a rise of over 2 trillion won (US$1.7 billion) for the second consecutive month. This growth can be attributed to low borrowing costs and an increased supply of homes, prompting people to take out such loans. The outstanding mortgage loans by local banks reached 275.4 trillion won as of the end of July, up 2.2 trillion won from the previous month.

Key Takeaways:

  • The outstanding mortgage loans by local banks reached 275.4 trillion won as of the end of July, up 2.2 trillion won from the previous month.
  • Bank home-backed lending grew by 2.5 trillion won in June, the largest gain in 10 months.
  • The BOK official stated that "despite eased growth from June, bank mortgage loans were on the solid expansion."
  • Banks' household loans, including home-backed lending, expanded by 1.5 trillion won on-month to 419.3 trillion won in July, slowing from a 2.5 trillion won expansion in June.
  • Corporate loans by local banks reached an outstanding 521.2 trillion won as of the end of July, up 3.2 trillion won from the previous month.
  • Bank loans to smaller firms rose by 1.1 trillion won to 436 trillion won and lending to large companies advanced by 2.1 trillion won to 85.2 trillion won.
  • Banks' time deposits increased by the largest amount in five months in July, rising by 12.4 trillion won on-month to 460.9 trillion won.

Statistics:

  • 275.4 trillion won: outstanding mortgage loans by local banks as of the end of July, up 2.2 trillion won from the previous month.
  • 2.5 trillion won: bank home-backed lending grew by in June, the largest gain in 10 months.
  • 1.5 trillion won: banks' household loans, including home-backed lending, expanded by on-month to 419.3 trillion won in July.
  • 3.2 trillion won: corporate loans by local banks reached an outstanding 521.2 trillion won as of the end of July, up from the previous month.
  • 12.4 trillion won: banks' time deposits increased by on-month to 460.9 trillion won in July.
  • 2.25 percent: BOK's key interest rate raised to in July.
  • 2 percent: BOK's record low key interest rate.
  • 16 months: consecutive month of a stand-pat run by the BOK.

Sources:

  • Yonhap
  • Asia Pulse
  • Bank of Korea (BOK)

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