In the second quarter of this year, household debt in South Korea surpassed 2,000 trillion won, setting a new record. The increase was the largest since the third quarter of 2021.
According to provisional statistics on household credit released by the Bank of Korea on August 19, the household credit balance reached 1,979.8 trillion won at the end of June. This is the largest amount recorded since the Bank began publishing related statistics in the fourth quarter of 2002.
Household credit is a comprehensive measure of household debt, including loans from banks, insurance companies, lending institutions, and public financial institutions, as well as money spent on credit cards.
Despite a contraction of 32 trillion won in the first quarter of 2024 due to monetary tightening, household credit rebounded in the second quarter, marking nine consecutive quarters of growth. The increase in the second quarter was 25.9 trillion won, the largest since the third quarter of 2021, which saw an increase of 34.8 trillion won.
Excluding sales credit (credit card payments), the household loan balance at the end of the second quarter was 1,891.3 trillion won, an increase of 24.9 trillion won from the previous quarter. This increase was larger compared to the first quarter of this year, which saw an increase of 13.4 trillion won.
Among household loan products, housing-related loans amounted to 1,190.8 trillion won, increasing by 12.2 trillion won. This increase was significantly larger than the previous quarter's increase of 8.1 trillion won, driven by a rise in housing transaction volumes. The balance of other loans, including credit loans, reached 700.5 trillion won, increasing by 12.8 trillion won, marking the largest increase since the third quarter of 2021.
Kim Sung-jun, head of the Bank of Korea's Financial Statistics Team, stated, "Household credit saw a significant increase in the second quarter, with housing-related loans and other loans each contributing about half to the growth." He explained that the rise in housing-related loans was influenced by increased housing transactions ahead of the expiration of the capital gains tax exemption and demand for loans related to pre-sold homes.
He added, "The substantial increase in other loans was due to a rise in credit loans from deposit banks and securities firms, as the stock market performed well during the quarter, significantly impacting demand for stock investments."
Kim noted that the increase in other loans in the second quarter was unusual compared to past trends, and he anticipates that as the stock market faces adjustments and uncertainty rises in the third quarter, the use of credit loans will stabilize rather than increase significantly as seen in the second quarter.
In terms of lending sources, household loans from deposit banks (with a balance of 1,022.9 trillion won) increased by 13.3 trillion won over three months. The growth in housing-related loans and the turnaround in other loans contributed to the increase in deposit bank lending.
Household loans from non-bank deposit-taking institutions, such as mutual finance, savings banks, and credit cooperatives (with a balance of 328.1 trillion won), increased by 3.1 trillion won, as the growth in housing-related loans slowed compared to the previous quarter.
* This article has been translated by AI.
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