Daijiworld Media Network- Seoul

Seoul, Apr 20: In a significant financial shift, household loans extended by South Korea’s five leading commercial banks have seen a sharp rise of 2.5 trillion won (approx. USD 1.7 billion) in April alone, according to industry figures released on Sunday.

The total outstanding loans now stand at 741.509 trillion won, driven largely by heightened real estate activity in Seoul’s upscale districts. Banks including KB Kookmin Bank, Shinhan Bank, and Hana Bank have reported a noticeable spike in mortgage-backed borrowings, particularly following the temporary lifting of the land transaction permission system in parts of Gangnam, Seocho, and Songpa districts in February.

The relaxation of regulations led to a flurry of home transactions, prompting residents and investors alike to take advantage of the opportunity before the government reintroduced the permission system in March to curb surging home prices and rising household debt.

The Ministry of Land, Infrastructure and Transport has reinstated the system in four major districts — Gangnam, Seocho, Songpa, and Yongsan — effective from March 24 to September 30, impacting nearly 400,000 households across 2,200 apartment complexes. Under this system, official consent is now required for real estate deals exceeding certain dimensions in designated zones.

Financial experts also observed an increase in loans being taken for investment purposes, citing volatile stock markets and speculation over impending interest rate cuts as contributing factors.

"There's a general upswing in loan demand. Some borrowers seem to be leveraging current market conditions for strategic investments,” an industry official commented.

With home-backed loans alone contributing 1.52 trillion won to the April figures, the development underscores the delicate balancing act facing authorities trying to stabilize the housing market while accommodating economic momentum.