Banks' mortgage lending grew at a faster pace in August as home transactions and move-ins picked up in the greater Seoul area. Other lending, meanwhile, swung to a decline as demand for stock investment and unsecured loans cooled, slowing overall growth in household debt from a month earlier.
Household loans at banks rose 3.4 trillion won ($2.5 billion) last month, according to the Bank of Korea's August 2026 financial market trends report released on the 9th. That was 2.1 trillion won less than July's 5.5 trillion won increase and also smaller than the 4.1 trillion won gain in August last year.
The slowdown came as other lending swung to a decline. Other loans went from a 2 trillion won increase in July to a 600 billion won decrease in August. The central bank attributed the shift to a slowdown in stock investment by individuals and tighter management of unsecured lending by banks.
Mortgage lending moved the other way. Home-backed loans rose 4 trillion won in August, 500 billion won more than July's 3.5 trillion won increase. Demand for jeonse loans continued to weaken, but the pace of mortgage growth quickened as home transactions in the greater Seoul area continued from May and move-ins increased.
Jeonse loans fell 700 billion won in August, a third straight monthly decline after drops of 700 billion won in June and 800 billion won in July. Loan demand tied to home purchases increased, however, lifting overall mortgage growth.
Corporate lending accelerated, unlike household debt. Bank loans to companies rose 9.7 trillion won in August, with the increase widening by 2 trillion won from July's 7.7 trillion won. Lending to large companies grew 4.9 trillion won, up from 3.8 trillion won, while lending to small and medium-sized enterprises rose 4.8 trillion won, up from 3.9 trillion won.
Companies borrowed more from banks to repay corporate bonds, and financial support programs for smaller businesses at some banks also contributed.
Corporate bonds, meanwhile, saw net redemptions of 900 billion won as rising interest rates raised issuance costs and seasonal factors weighed on the market. Commercial paper and short-term bonds recorded net issuance of 4.1 trillion won.
