Household lending at major banks continues to climb even as lenders independently raise their own borrowing thresholds. Mortgage balances alone grew by nearly 1 trillion won ($681 million) in a single week. Warnings are growing that the "lending cliff" feared by genuine homebuyers could arrive sooner than expected.
According to financial industry data released Saturday, combined household loan balances at the five major banks — KB Kookmin, Shinhan, Hana, Woori and NH NongHyup — stood at 777.61 trillion won as of Thursday.
That was up 378 billion won from 777.23 trillion won on July 15, an increase recorded over just six business days. Compared with the end of last month, balances have risen 2.65 trillion won. The explosive surge seen in May and June has eased somewhat, but the pace of growth remains steep compared with late last year and early this year.
Mortgage loans drove the increase over the past week. The five banks' combined mortgage balance rose 997.1 billion won — from 615.91 trillion won on July 15 to 619.9 trillion won on Thursday — as loans applied for earlier, on the back of a broader pickup in real estate transactions, were disbursed in sequence.
By contrast, personal credit loans swung to a decline, falling 589 billion won over the same period — from 110.05 trillion won to 109.46 trillion won. Analysts attributed the drop to cooling demand for stock-investment loans as volatility widened in both domestic and overseas equity markets.
"Pre-approved mortgage loans are being disbursed and pushing up the overall household loan balance," a commercial bank official said. "Demand for debt-funded investing appears to have dipped slightly as stock-market uncertainty grows, but revolving credit lines still account for a significant share of the total, so there is room for that figure to swing back."
The tightening lending environment has left banks with little room to maneuver. The five banks' combined household loan balance, excluding policy loans, stood at 649.54 trillion won as of Thursday. While that was slightly lower than on July 15, it still exceeds the aggregate annual growth target set by financial regulators by about 230 billion won.
In response, banks have rolled out a string of measures — capping loan limits by borrower or by branch, shutting loan-broker application channels and blocking enrollment in mortgage insurance products (MCI and MCG) to reduce maximum loan amounts. Even banks that still have lending capacity have moved quickly to impose voluntary restraints, wary of a balloon effect that could concentrate demand at their counters.
Market observers expect banks' lending headroom to shrink further as year-end approaches, triggering even stricter restrictions. In past years, banks facing annual volume targets have frequently suspended certain loan products altogether in the final months of the year.
The wave of lending restrictions has fueled frustration and anxiety among genuine homebuyers. Critics argue that rather than curbing the rapid rise in household debt and cooling an overheated real estate market as intended, the measures are hitting ordinary people who simply need to buy a home to live in or secure a lease deposit.
At a recent national public forum on real estate policy convened by President Lee Jae-myung, voices from the field rang out about the difficulty of securing financing as banks exhaust their lending capacity under household credit volume controls.
With resistance from genuine borrowers intensifying, some in the financial sector are raising the possibility that the government's household lending management stance could be applied with greater flexibility. President Lee has already directed the Financial Services Commission to review a request to exclude group loans from the overall volume management framework. The broad household lending controls are expected to remain in place, but analysts say targeted relief measures or fine-tuning could be crafted for genuine borrowers such as young adults and newlyweds — groups Lee has specifically cited as needing tailored support.
"The effect of banks' lending restrictions will show up with a lag, but the complaints from real-demand borrowers about the lending cliff will weigh heavily on regulators as well," a financial industry official said. "There are also growing concerns that the volume targets are too tight relative to the revised GDP growth forecast, so the industry is watching closely to see whether authorities will ease their grip on household lending management to give the market some breathing room."
ehkim@heraldcorp.com
