In January, the banking sector in South Korea reported a continued decline in household loans, particularly housing mortgage loans, marking a significant trend where stricter lending thresholds are prompting borrowers to seek loans from secondary financial institutions. The Bank of Korea's recent report indicates that household borrowing from banks fell by 1 trillion won from December, with housing mortgage loans decreasing by 600 billion won and other types of loans decreasing by 400 billion won. This trend follows a reduction in mortgage loans that began in December, attributed to ongoing household debt management and declining demand for lease funds.

The significant drop in mortgage loans from banks, which surged dramatically following the implementation of real estate policies last June, has led to a noteworthy shift in borrowing behavior. As mortgage offers from banks have significantly tightened, secondary financial institutions, such as savings banks and mutual financial cooperatives, have seen an increase in demand for housing mortgage loans, growing from 2.8 trillion won to 3.6 trillion won this month. This shift indicates a broader change in the financial landscape, where borrowers are no longer relying solely on traditional banking options but instead turning to alternative sources for funding.

Looking ahead, the Financial Services Commission has cautioned that the fluctuations in household loan demand could continue, especially with the opening of financial activities in February and new school year demands contributing to potential increases in loan sizes. They are keeping a close eye on the ongoing trends in household mortgage loans, particularly from secondary financial institutions, to manage the market effectively and ensure stability in the financial system.