South Korea’s household lending across all financial institutions fell by a provisional KRW 2.2 trillion in September from a month earlier, marking the first net decline since December 2025. The reversal followed monthly increases of KRW 6.4 trillion in July and KRW 2.8 trillion in August, according to the Financial Services Commission.
The decline came despite continued growth in housing-backed borrowing. Mortgage lending increased by KRW 3.3 trillion, down from a KRW 4.3 trillion rise in August. Other household loans contracted by KRW 5.5 trillion, substantially more than August’s KRW 1.5 trillion decrease, as the reduction in unsecured credit loans widened to KRW 3.0 trillion.
Banks recorded a KRW 600 billion increase in household lending, sharply below the KRW 3.5 trillion gain reported for August. Bank mortgage growth slowed to KRW 2.9 trillion from KRW 4.1 trillion, while other bank household loans declined by KRW 2.3 trillion. Policy-backed lending maintained a KRW 1.1 trillion monthly increase.
Nonbank lenders drove the overall decline
Nonbank financial institutions posted a combined KRW 2.8 trillion decline, compared with a KRW 700 billion reduction in August. Lending fell by KRW 700 billion at mutual finance institutions, KRW 800 billion at insurers, KRW 900 billion at credit finance companies and KRW 400 billion at savings banks.
The commission attributed September’s overall contraction to slower housing transactions and home completions, quarter-end sales and write-offs of distressed loans, and seasonal factors including holiday bonuses. It cautioned that expectations of higher home prices and possible volatility in unsecured lending remain risks during the rest of the year.
- Meeting date
- October 15, 2026
- Meeting location
- Government Complex Seoul
- Main agenda
- September lending trends and follow-up measures for the August 13 housing policy
Financial authorities reviewed the figures at an October 15 household debt meeting attended by government agencies, regulators, financial industry associations and five major banks. Officials said the recent increase in the annual household lending growth target from about 1.5 percent to 3.0 percent, together with separate management of group housing loans, should limit the risk of a year-end lending cliff. They will also examine lending at newly completed housing projects and implement housing finance measures scheduled for October 19.