As banks tighten their household loan standards, the outstanding balance of personal credit loans through online investment-linked finance (P2P) has surged 3.5 times compared to January of this year. Real estate secured loans are also holding steady in the 700 billion won range. Industry experts believe that borrowers unable to secure sufficient limits from banks are turning to the P2P market.
According to the P2P Center, the central record management portal for the industry, the total loan balance from 46 domestic P2P companies reached 2.2671 trillion won at the end of August. This marks an increase of 659.9 billion won (41.1%) from 1.6072 trillion won at the end of last year. The upward trend continued with balances of 1.9164 trillion won at the end of the first quarter and 2.1886 trillion won at the end of July.
P2P loans are financial services that connect investors' funds to borrowers through online platforms. P2P companies offer various products, including home equity loans, personal credit loans, and stock-backed loans.
Notably, personal credit loans have seen significant growth. As of late August, the outstanding balance of P2P personal credit loans reached 610 billion won, 3.5 times the 174 billion won recorded in January. The share of personal credit loans in total P2P loans increased from 10% to 27% during the same period.
Industry analysts attribute this trend to the banks' management of total household loan volumes and the reduction of credit loan limits. Some borrowers, unable to secure necessary funds from banks, have sought P2P loans, which operate under different regulatory frameworks.
The outstanding balance of P2P real estate secured loans was 700.3 billion won at the end of August, marking two consecutive months above the 700 billion won threshold. This represents an increase of 21.7 billion won (3.2%) compared to 678.6 billion won in January.
After financial authorities introduced loan-to-value (LTV) regulations in April, P2P real estate secured loans initially declined but began to rise again after reaching 690.7 billion won in June. Analysts suggest that demand for funds has shifted to P2P loans as banks have halted mortgage insurance (MCI, MCG) and reduced home equity loan limits.
Demand for P2P loans is expected to continue in the near term. Although financial authorities recently raised the target for household loan growth to 3%, banks are still managing loans within their allocated limits.
The five major commercial banks are projected to have an additional household loan capacity of about 300 billion won in the second half of the year. Excluding certain categories like group loans, there is limited additional capacity for general household loans, according to banking sources.
A financial industry official stated, “As the barriers to bank loans increase, it is likely that borrowers unable to secure necessary funds will continue to seek P2P loans. Given the rapid growth in loan balances, it is also important to monitor borrowers' repayment abilities and the risk of delinquencies.”
* This article has been translated by AI.
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