South Korea Household Loans Surge 9.3T in May
Citi noted that South Korean household borrowing accelerated sharply in May, with total household loans increasing by KRW9.3 trillion compared with the previous month. This rise represents the fastest monthly expansion since August 2024 and follows an April increase of KRW3.5 trillion.
The bulk of the May surge originated from personal credit line loans and overdraft accounts, which together grew by KRW5.3 trillion during the month, according to data from the Financial Supervisory Service.
Citi linked the loan expansion to heightened retail demand for equities. The combined value of stock investment trusts and investor deposits held at securities firms reached a new 12‑month high in May, although the exact amount was not disclosed. Capital continued to move out of traditional bank time‑deposits and bond products into equity‑related investments.
Retail participation in the equity market strengthened further in June. Net purchases by retail investors, including activity related to exchange‑traded funds (ETFs) processed through securities firms, climbed to a record high on a 12‑month basis as of 11 June.
Domestic investors have largely absorbed selling pressure from foreign investors in the KOSPI, a dynamic Citi believes has contributed to recent weakness in the Korean won.
The report also highlighted a strengthening housing market in Greater Seoul. Data from the Korea Real Estate Board showed that Seoul apartment rental prices, measured on a four‑week moving‑average basis, rose to their highest level since November 2015 during the second week of June. Apartment sale prices in the capital remained firm.
Citi expects the Greater Seoul housing‑market rally to continue into the second half of 2026, supported by equity‑market gains, semiconductor‑sector bonuses, and a structural shortage of housing supply.
While a potential rate‑hiking cycle by the Bank of Korea could dampen demand for unsecured consumer loans—because such products are more sensitive to short‑term interest rates—the bank believes the impact on housing demand may be limited. Recent home‑purchase financing increasingly relies on investment gains and bonus income rather than traditional mortgage borrowing.