In March 2024, the outstanding balance of household loans across all financial sectors fell KRW4.9 trillion (preliminary), declining at a faster pace compared to the previous month (down KRW1.9 trillion).

* Change (in trillion KRW, y-o-y): +6.2 (Oct 2023), +2.6 (Nov), +0.1 (Dec), +0.9 (Jan 2024), -1.9 (Feb), -4.9 (Mar)^p

(By Type)  Home mortgage loans increased KRW0.05 trillion, growing at a much slower pace compared to the previous month (up KRW3.7 trillion), due to a substantial drop in the banking sector (up KRW4.7 trillion → up KRW0.5 trillion). Other types of loans declined KRW4.9 trillion, with drops seen in both the banking (down KRW2.8 trillion → down KRW2.1 trillion) and nonbanking (down KRW2.7 trillion → down KRW2.8 trillion) sectors.

(By Sector)  Household loans turned lower in the banking sector, while the pace of decline moderated in the nonbanking sector. In March, banks saw a decline of KRW1.6 trillion in household loans, which shifted down from the growth of KRW1.9 trillion a month ago, with the implementation of the stressed debt service ratio (DSR) rules. Other types of loans from banks also continued to decline (down KRW2.8 trillion → down KRW2.1 trillion), led by credit loans.

In the nonbanking sector, household loans fell KRW3.3 trillion. Mutual finance businesses (down KRW2.4 trillion) and insurance companies (down KRW0.2 trillion) saw slower paces of decline from a month ago, while specialized credit finance companies (down KRW0.4 trillion) and savings banks (down KRW0.3 trillion) saw faster paces of decline.

(Assessment)  The continued decline in household loans appears to be caused by the prolonged high interest rates and delayed recovery in housing market transactions. The financial authorities will continue to closely monitor situations regarding the housing market and interest rates to make sure that household debt growth is stably managed with a long-term perspective.

* Please refer to the attached PDF for details.