South Korea’s financial sector tightened household loan management in the second quarter, pushing per-borrower new household lending to its lowest level in three years and three months. Mortgage lending fell sharply among borrowers in their 30s and 40s and across the Seoul metropolitan area, while borrowers in their 20s — who carry a higher proportion of first-time homebuyer and no-homeowner loans — actually saw mortgage lending increase, surpassing the average for those in their 40s.

According to the Bank of Korea’s “Q2 2026 Borrower-Level Household Debt Statistics (Preliminary)” released on the 25th, per-borrower new household loan origination in Q2 came to 34.14 million won (approximately $25,000), down 1.28 million won (approximately $930), or 3.6%, from the previous quarter. This marks the lowest level since Q1 2023.

Borrowers in Their 40s and the Seoul Metropolitan Area Hit Hardest — Seoul Plunges 60.65 Million Won

By product type, the decline in mortgage loans was most pronounced. Per-borrower new mortgage origination in Q2 totaled 208.29 million won (approximately $150,000), down 21.1 million won (approximately $15,000), or 9.2%, from the previous quarter. This is the lowest since Q4 2024 and the largest quarterly decline since the statistics were first compiled in 2013.

By age group, new mortgage lending among borrowers in their 40s fell by 35.37 million won (approximately $26,000) to 209.77 million won (approximately $150,000) — the steepest drop of any cohort. Borrowers in their 30s saw a decline of 26.32 million won (approximately $19,000) to 263.58 million won (approximately $190,000), while those in their 50s and 60s and older fell by 12.81 million won (approximately $9,300) and 10.69 million won (approximately $7,700), respectively.

By region, the Seoul metropolitan area posted the sharpest declines. Per-borrower new mortgage lending in the capital region dropped 43.97 million won (approximately $32,000) over three months to 230.59 million won (approximately $170,000). Seoul in particular saw a plunge of 60.65 million won (approximately $44,000), falling from 332.05 million won (approximately $240,000) to 271.4 million won (approximately $200,000) per borrower — the lowest since Q2 2024. Gyeonggi and Incheon also declined by 33.48 million won (approximately $24,000) to 213.49 million won (approximately $150,000).

Min Sook-hong, head of the Household Debt Micro Statistics Team at the Bank of Korea’s Economic Statistics Department 1, explained: “The primary mortgage-taking age group is those in their 30s and 40s, and lending limit regulations have led to increased transactions of mid- to low-priced homes in the Seoul metropolitan area, which has contributed to the decline in mortgage lending.”

Only Borrowers in Their 20s Buck the Trend — First-Time Homebuyer and No-Homeowner Effect

Per-borrower new mortgage lending rose only among borrowers in their 20s, increasing by 3.92 million won (approximately $2,800) to 232.17 million won (approximately $170,000) — the only age group to post an increase. This exceeds the average for borrowers in their 40s (209.77 million won, or approximately $150,000). New mortgage origination among 20-somethings set another record high, following the previous quarter.

“Borrowers in their 20s have a relatively high proportion of no-homeowner and first-time homebuyer status, and these two loan categories face lighter regulation, which has expanded lending,” Min said. “Given the characteristics of borrowers who can qualify for mortgages, many in their 20s already have income verification and other conditions in place.” However, borrowers in their 20s accounted for only 6.0% of total new mortgage lending.

By region, new mortgage lending in South Korea’s Honam region rose by 11.13 million won (approximately $8,100) to 173.15 million won (approximately $130,000), attributed to new apartment supply in Jeonju, Gwangju, and surrounding areas. The Daegyeong region also saw a modest increase of 1 million won (approximately $720), but the Dongnam, Chungcheong, and Gangwon-Jeju regions all posted declines.

By financial sector, non-bank new mortgage origination plunged by 61.22 million won (approximately $44,000) to 166.82 million won (approximately $120,000), while the banking sector fell by 12.4 million won (approximately $9,000) to 216.97 million won (approximately $160,000).

New Lending Down, But Balances Up — Reduced Repayments to Blame

Despite the contraction in new lending, per-borrower household loan balances at the end of Q2 rose by 500,000 won (approximately $360) from the previous quarter to 97.9 million won (approximately $71,000). Mortgage loan balances also increased by 1.87 million won (approximately $1,400) to 161.93 million won (approximately $120,000).

By age group, borrowers in their 40s held the largest household loan balances at 124.22 million won (approximately $90,000), up 620,000 won (approximately $450), followed by those in their 30s at 113 million won (approximately $82,000), up 490,000 won (approximately $350). In contrast, borrowers in their 20s saw balances fall by 930,000 won (approximately $670) to 33.65 million won (approximately $24,000), while those 60 and older declined by 360,000 won (approximately $260) to 83.91 million won (approximately $61,000).

Average mortgage balances per borrower rose across all age groups, with particularly notable increases among those in their 20s and 30s. Borrowers in their 20s saw balances climb 5.75 million won (approximately $4,200) to 203.94 million won (approximately $150,000), surpassing the 200 million won (approximately $140,000) threshold for the first time. Those in their 30s rose by 4.09 million won (approximately $3,000) to 234.19 million won (approximately $170,000), a record high. Borrowers in their 40s and 50s increased by 1.86 million won (approximately $1,300) and 440,000 won (approximately $320), respectively.

On the divergence between falling new lending and rising balances, Min said: “It’s due to reduced repayments. Balances are largely composed of loans held by existing borrowers, and in Q2, the amount of loan repayments decreased compared to the previous quarter, meaning less money was leaving the balance side — so new origination and balances moved in opposite directions.”

New lending could rebound in Q3. “With the August 13 measures expanding the total household loan ceiling, a significant portion is expected to be executed through group lending, which could increase new origination,” Min said. “However, we still need to monitor the broader trend of strengthened household loan management, the Seoul metropolitan area housing market, and the flow of market funds into equities.”

Note: Borrower-level household debt statistics are micro-level data compiled by the Bank of Korea on an individual borrower basis, tracking new origination and outstanding balances of household loan borrowers. These figures differ from aggregate lending totals reported by financial institutions.