BOK survey shows banks likely to tighten household loans in Q3

Korean banks are expected to tighten lending standards for households in the third quarter amid growing concerns over credit risks, a central bank survey showed Monday.

The index gauging banks' lending attitudes stood at minus 7 for the July-September period, down from minus 2 in the previous quarter, according to a survey of 203 financial institutions, including 18 banks, conducted by the Bank of Korea (BOK).

A reading below zero indicates that a majority of lenders plan to tighten lending standards.

The index of banks' lending attitudes has remained in negative territory for six consecutive quarters since the second quarter of 2025, as financial authorities have tightened regulations on household lending since late 2024 to rein in surging household debt and rising housing prices in Seoul and surrounding regions.

The BOK said both mortgage and nonmortgage loans extended to households by banks are expected to be tightened as the government's regulative efforts continue.

Lending attitudes toward large corporations and small- and medium-sized enterprises (SME) are both projected to remain unchanged from the previous quarter, it added.

The survey also showed that demand for household mortgage loans is likely to decline, while demand for general household loans is projected to increase, driven by continued demand for stock market investment funds.

Demand for corporate loans is also expected to rise for both large firms and SMEs amid heightened uncertainty stemming from the crisis involving Iran.

Yonhap