Unsecured loans rise in October on leveraged borrowing

A pedestrian passes a branch of a local bank in Seoul, Oct 29. Yonhap By Lee Kyung-min Unsecured loans rose over 608 billion ($460 million) in October from the month before, breaking nearly two years of sustained decline, after leveraged borrowers sought a new line of credit due to tightened mortgage rules, data showed Friday. Propelling last month’s development is the shortened maturity of debt savings ratio-tied from 50-year mortgages to 40 years.Also tightened were borrowing limits and qualification requirements for high-income earners. The upturn in the demand for loans at the annual borrowing rate of nearly 7 percent is largely for buying homes. Some of it comes from borrowers seeking to increase holdings of cryptocurrency investments. Korea Federation of Banks data showed that the borrowing rates for unsecured loans by 17 local banks averaged 6.77 percent in September, up 0.31 percentage points from the year before. Jeonbuk Bank had the highest rate of 7.58, followed by Kbank (7.51 percent). According to the country’s top five commercial lenders – KB Kookmin, Shinhan, Woori, Hana and NongHyup – the combined balance of their unsecured loans rose to 107.94 trillion won last month, up 608.1 billion won from September. The figure peaked at 139.55 trillion won in December of 2021 and has since trended down for the past 22 months. “Cases of borrowers seeking unsecured loans are reported, mostly due to their loan limits,” a local bank official said. Some of the borrowed funds are finding their way into virtual assets and securities investment. The price of Bitcoin is about 48 million won, up 30 percent from a month earlier, as buoyed by expectations that the U.S. financial authorities will approve the Bitcoin spot exchange-traded funds (ETF). The Oct. 5 initial public offering of Doosan Robotics, the blockbuster deal of this year, drew investment funds of over 33 trillion won. The leading local robotics share has a market capitalization of over 2.91 trillion won.