South Korea Feb. household lending falls to KRW1,172.3T

South Korean banks’ household lending declined for the second consecutive month in January 2026, reflecting ongoing regulatory efforts to cool real estate speculation and manage debt risks. Total household debt to deposit-taking banks stood at 1,172.7 trillion won (807.4 billion U.S. dollars) by month-end, a reduction of 1.0 trillion won from December 2025, according to the Bank of Korea (BOK). Mortgage loans, a key component of household debt, fell by 600 billion won (413.1 million dollars) in January, continuing a trend of contraction since late 2025 amid tightened lending policies.

The decline aligns with government measures such as the June 27 and October 15 policies, which imposed stricter borrowing limits for housing transactions. These interventions contributed to a 11-month low in monthly household loan growth, with a 2.0 trillion won decrease recorded in December 2025. Other household loans, including credit lines and commercial real estate-backed loans, also dropped by 400 billion won in January, marking a two-month consecutive decline.

In contrast, corporate lending rose by 5.7 trillion won (3.9 billion dollars) in January, driven by increased borrowing from both large and small firms. The BOK maintained its benchmark interest rate at 2.50 percent, unchanged since October 2024, as it balances inflationary pressures with growth concerns. While household debt contraction persists, officials noted a “balloon effect” in non-bank lending, which partially offset the decline in total household borrowing across financial institutions.