Household debt hit a record high of 1,993.1 trillion won while demand shifted to secondary lenders after tighter controls by banks
Outstanding household loans in the first quarter totaled 1,865.8 trillion won, up 12.9 trillion won from the end of the previous quarter.
Household debt reached a record high in the first quarter of this year, surpassing 1,993 trillion won (approximately $1.3 trillion) as housing-related loan demand flowed into secondary financial institutions amid stronger household debt management by the banking sector, increasing by 14 trillion won over three months.
According to the Bank of Korea’s preliminary statistics on “Household Credit for the First Quarter of 2026” released on May 19, outstanding household credit stood at 1,993.1 trillion won as of the end of the first quarter this year. That was an increase of 14 trillion won from the end of last year. Household credit refers to the scale of debt combining loans taken out by households from financial institutions such as banks and secondary financial institutions, as well as credit card purchases on credit. The pace of increase widened from the previous quarter’s 11.3 trillion won.
By product, housing-related loans , which means the sum of individual mortgage loans, jeonse deposit loans and group loans, increased by 8.1 trillion won this year. Other loans, including credit loans, rose by 4.8 trillion won. The increase was larger than the previous quarter’s 4.1 trillion won, mainly due to credit extended by securities firms.
By institution, household loans at deposit banks totaled 1,009.6 trillion won during the period, down 200 billion won from the previous quarter, marking the first decline in 12 quarters. This was affected by a slowdown in the increase in housing-related loans, which rose by 300 billion won, and by other loans shifting to a decline of 600 billion won.
Lee Hye-young, head of the Financial Statistics Team at the Bank of Korea, said, “Banks may have operated more conservatively in the first quarter under the trend of strengthened household debt management before receiving their (annual) target figures from the financial authorities,” adding, “For credit loans, it appears that many were repaid using bonuses and the like.”
Household loans at non-bank depository institutions such as savings banks, mutual finance cooperatives, credit unions and community credit cooperatives totaled 325 trillion won, rising by 8.2 trillion won in the first quarter. That was double the increase of 4.1 trillion won in the previous quarter.
Lee Hye-young of the Financial Statistics Team under the Financial Statistics Division of the Bank of Korea said, “This reflects loan demand before the implementation of strengthened management measures by the financial authorities,” adding, “Given that there have been requests to refrain from expanding household lending in the mutual finance sector and that the National Agricultural Cooperative Federation and the Korean Federation of Community Credit Cooperatives, among others, have also suspended loan applications through solicitors, the scale is not likely to increase significantly going forward.”
At other financial institutions such as insurers, card companies, securities firms and pension funds, the increase in household loans also jumped sharply to 5 trillion won from 1.2 trillion won in the previous quarter. The decline in housing-related loans narrowed, while the increase in other loans expanded.
Outstanding sales credit, or card payments, was tallied at 127.3 trillion won. It rose by 1.1 trillion won from the previous quarter, centered on specialized credit finance companies, amid increased credit card usage.
Lee said, “There is a seasonal factor in that card use tends to be high in the fourth quarter at year-end and relatively lower in the first quarter,” but added, “Although it has fallen sharply in recent first quarters, this year it appears to have maintained an upward trend, so we believe that part of that also reflects improved consumption.”
The Bank of Korea said the ratio of household debt to nominal gross domestic product this year could decline. Lee said, “Advance real GDP came in at 3.6% growth from the same period of the previous year, and nominal GDP is expected to come in even higher, so we believe the household debt ratio in the first quarter will fall further.”
Jung Suk-yee
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