Seoul: South Korea’s household credit surged at the fastest rate in four years this February, driven by a booming property market in the affluent districts of southern Seoul, financial data revealed on Sunday. Outstanding household credit, extended by all financial institutions such as commercial banks, savings banks, and insurance and securities firms, grew by approximately 5 trillion won (US$3.42 billion) from January to February.
According to Yonhap News Agency, this marks the largest month-over-month increase in February since 2021, when household loans expanded by 9.7 trillion won from the previous month. The growth was primarily fueled by loans from South Korea’s five major commercial banks, including KB Kookmin Bank, Shinhan Bank, and Hana Bank, which collectively increased by more than 3 trillion won last month.
Furthermore, loans from thrift institutions, such as savings banks, internet banks, and credit unions, rose by over 1 trillion won. Experts suggest that while seasonal factors contribute to this increase, there is potential for household credit to rise even further due to escalating real estate prices. The property market has experienced significant activity following the lifting of the land transaction permit zone regulation in the Gangnam area of southern Seoul.
The regulation, which previously required permission for property transactions exceeding a certain size in select affluent southern Seoul districts, including Gangnam and Songpa, was lifted on February 13. Separate industry data indicates that housing prices in the four key districts increased by 0.36 percent in the second week of February, marking the highest weekly growth since late August of the previous year.