Demand for housing loans in South Korea
Typically, higher interest rates are connected to less demand for loans, but demand in South Korea continued to rise until the first quarter of 2023. The five largest banks in the country, Shinhan, KB Kookmin, Woori, Hana, and NH Nonghyup, saw a combined increase in their mortgage loan balance from April to July 2023. Despite the high interest rates, the continued demand for mortgage loans has brought some to believe that housing prices will revive from the slump seen in the previous year.Household debt in South Korea
However, as borrowing continues to rise, there are concerns about worsening household debt. Rising interest rates have led to an increase in the household loan delinquency rate, which, contrary to a potential housing market recovery, has led to general fears about the soundness of the banking sector. Although still to be seen, continued higher rates in mortgages alongside other types of loans would likely see a decline in demand over time.
