Korea's top 5 banks burn 85% of annual mortgage quota in H1 — KB Kookmin halves home loan cap overnight
TL;DR
Korea's five commercial banks burned 85% of their annual household-loan quota in H1. KB Kookmin cut mortgage cap from KRW 600M to 300M — but credit loans keep rising.
South Korea's five largest commercial banks have consumed 85% of their annual household-loan growth-management quota in the first half of the year, with two of the five already past their full-year target. The industry is bracing for a second-half "loan cliff." To meet supervisory totals, banks are tightening underwriting aggressively — KB Kookmin cut its home-purchase loan cap from KRW 600 million to KRW 300 million, and multiple banks lowered new credit-loan ceilings.
But driven by a hot stock market, credit-loan balances keep rising fast. As of July 9, five-bank household loan balances had grown by over KRW 1 trillion this month, with credit loans up KRW 781.5 billion. Passbook-linked lines allow withdrawal at any time and carry over KRW 53 trillion in unused capacity, making practical enforcement extremely hard.
Two forces have banks pinned in the middle — regulators want household debt totals controlled, while a rallying stock market pushes retail investors to margin up via credit loans. To hit supervisory targets, banks have to cut mortgages, but cutting mortgages directly hurts home buyers. KB's decision to halve the cap is the single largest tightening step in three years, pushing Seoul's core-district home purchase threshold higher overnight.
Korea's household-debt-to-GDP ratio ended 2025 at 106%, near the top of OECD. The Bank of Korea just hinted at more rate cuts to support growth this month — one hand stimulating, the other tightening; policy tools are pulling against each other.
Loan cliff realized: H2 mortgage volume drops to 30% of H1, Seoul home prices turn negative QoQ in Q4 for the first time. Not realized: banks find off-balance-sheet workarounds and keep lending, full-year growth breaks 15%, and regulators tighten more tools next year.
via Maeil Business Newspaper
But driven by a hot stock market, credit-loan balances keep rising fast. As of July 9, five-bank household loan balances had grown by over KRW 1 trillion this month, with credit loans up KRW 781.5 billion. Passbook-linked lines allow withdrawal at any time and carry over KRW 53 trillion in unused capacity, making practical enforcement extremely hard.
Two forces have banks pinned in the middle — regulators want household debt totals controlled, while a rallying stock market pushes retail investors to margin up via credit loans. To hit supervisory targets, banks have to cut mortgages, but cutting mortgages directly hurts home buyers. KB's decision to halve the cap is the single largest tightening step in three years, pushing Seoul's core-district home purchase threshold higher overnight.
Korea's household-debt-to-GDP ratio ended 2025 at 106%, near the top of OECD. The Bank of Korea just hinted at more rate cuts to support growth this month — one hand stimulating, the other tightening; policy tools are pulling against each other.
Loan cliff realized: H2 mortgage volume drops to 30% of H1, Seoul home prices turn negative QoQ in Q4 for the first time. Not realized: banks find off-balance-sheet workarounds and keep lending, full-year growth breaks 15%, and regulators tighten more tools next year.
via Maeil Business Newspaper
