Korea's household credit slowdown came from margin money, not mortgages

The Bank of Korea's July financial market report, published on the 14th, puts household loans at banks at 1,194.8 trillion won, an increase of 5.4 trillion on the month against 7.6 trillion in June ^[1][2]. Where that 2.2 trillion of deceleration came from is the useful part: 1.3 trillion of it, roughly 59 percent, was in "other loans," the bucket that contains unsecured credit lending ^[3][1].

The BOK attributes the narrowing in that bucket to individuals slowing their stock investment ^[4]. Retail investors bought a net 42.6 trillion won of shares in May and 52 trillion in June, then 3.4 trillion in July ^[5], a drop of 48.6 trillion that left July's buying at about 6.5 percent of June's ^[3][4]. Other loans fell about 39 percent month on month over the same stretch ^[8].

That is a clean correlation, and it is worth being precise about how much weight it can carry. Bank credit and other loans grew 3.3 trillion won in the month when retail investors bought 52 trillion net ^[3][5], and the 1.3 trillion swing in that line is about 2.7 percent of the swing in net equity purchases ^[5]. Bank unsecured credit was a marginal funding source at the top of the boom rather than the main one, and the report does not break out where the rest came from. It does record that demand deposits fell 80.8 trillion won in July, the largest decline since the series began, against a 12.2 trillion rise in June ^[15]. The BOK frames the deposit shifts as movements by large companies, not households ^[16].

Housing remains the base load. Home-backed lending grew 3.4 trillion won, down from 4.3 trillion, which is still about 63 percent of the month's household increase ^[6][6]. The remaining 0.9 trillion of the slowdown, roughly 41 percent, came from that line ^[2]. The central bank says the April and May rise in greater Seoul transactions carried over, offset by fewer jeonse deals and easing demand for interim payments on previously presold units ^[8]. Jeonse loans have now fallen three months running: 600 billion won in May, 700 billion in June, 800 billion in July ^[7]. Even after the deceleration, household growth is roughly double the 2.7 trillion won of July last year ^[19].

Corporate borrowing went the other way. Bank loans to companies rose 7.7 trillion won against 5.1 trillion in June ^[9], exceeding household growth by 2.3 trillion ^[7]. Large firms added 3.8 trillion, partly working capital to repay corporate bonds ^[10]; small and medium enterprises added 3.9 trillion on value-added tax payments and expanded lending by some banks ^[11]. Corporate bonds saw net redemptions of 1.9 trillion for an eighth consecutive month, which the BOK attributes to issuance costs amid rising rates and a seasonal lull ^[12], while commercial paper and short-term bonds swung to 4 trillion of net issuance ^[13] and equity issuance reached 1.5 trillion on large rights offerings ^[14]. Time deposits rose 42.3 trillion, about three times June's 14.2 trillion ^[17], which the BOK says reflects banks competing for deposits to fund lending and manage regulatory ratios, plus corporates parking idle cash ^[18].

Watch the August other-loans figure against retail net buying, since a genuine equity-credit link should track it closely. Watch whether home-backed lending reaccelerates as spring transaction volumes feed through, or whether the jeonse decline extends to a fourth month. And watch a possible ninth month of bond net redemptions alongside the deposit competition, which is where bank funding costs get set.