The pace of growth in household loans in the financial sector continued to slow.

The Financial Services Commission on Tuesday released provisional data on household loan trends in 2025 and held a joint interagency meeting to review household debt.

The data showed household loans across the financial sector rose 37.6 trillion won, or 2.3 percent, in 2025 from the end of the previous year. The increase was smaller than the 41.6 trillion won rise a year earlier.

The ratio of household debt to gross domestic product (GDP) also continued to stabilise on a downward trend. The ratio fell to 97.3 percent in 2022 from 98.7 percent in 2021, then to 93.0 percent in 2023 and 89.6 percent in 2024, and stood at 89.3 percent as of the third quarter of 2025. Financial authorities expect it to be around 89.0 percent as of the end of 2025.

By loan type, mortgage loans increased 52.6 trillion won, with the pace of growth slowing from 58.1 trillion won a year earlier. Other loans, including unsecured credit loans, fell 15.0 trillion won, a smaller decline than the 16.5 trillion won drop a year earlier.

By sector, household loans at banks rose 32.7 trillion won, sharply smaller than the 46.2 trillion won increase a year earlier.

Household loans at non-bank financial institutions rose 4.8 trillion won, shifting to growth from a year-earlier decline of 4.6 trillion won.

Bank mortgage loans rose 32.4 trillion won, though the pace of growth slowed from a year earlier, while other loans returned to a slight increase. In the non-bank sector, loans fell at credit-specialised financial companies, insurers and savings banks, while mutual finance institutions led by Saemaul Geumgo rose 10.5 trillion won.

In December, household loans across the financial sector fell 1.5 trillion won, turning negative from a 4.4 trillion won rise in the previous month and a 2.0 trillion won increase in the same month a year earlier. Household loans at banks fell 2.2 trillion won, and growth at non-bank financial institutions slowed to 0.7 trillion won. Bank mortgage loans turned negative for the first time in a month, affected by declines in banks' own mortgage loans and the Bogeumjari Loan.

The FSC said it reviewed 2025 household loan trends at the meeting chaired by Secretary General Shin Jin-chang and finalised detailed measures to overhaul contribution rates for the Housing Finance Credit Guarantee Fund.

Shin said conditions for managing household loans were not easy due to increased volatility in the housing market in the first half of last year and expectations of interest rate cuts, but tighter measures, the rollout of phase 3 stress DSR and cooperation by the financial sector helped keep household loans under relatively stable control. He said the FSC will press ahead with a firm stance on tightening management to stabilise household debt in 2026.

He added it will also prepare additional measures to ease the concentration of funds into real estate and shift money flows toward productive sectors.

The FSC also urged financial companies to ensure excessive competition does not re-emerge as they reset their total lending management targets for 2026. It also stressed thorough management from the start of the year is needed to prevent lending from being suspended or becoming concentrated during specific periods.

The FSC also plans to implement the overhaul of contribution rates for the Housing Finance Credit Guarantee Fund from April to manage large mortgage loans. Based on the average loan amount for mortgages and jeonse loans handled by financial institutions, a rate of 0.05 percent applies when a loan amount is no more than 0.5 times the average, and 0.30 percent applies when it exceeds 2 times the average. After the system takes effect, the amount of contributions paid by financial institutions is estimated to edge down from about 1.0 trillion won based on 2025 levels.

The FSC said it expects the overhaul to reduce, to some extent, incentives for financial institutions to handle large mortgage loans. It urged institutions to ensure thorough preparations, including systems development, so implementation proceeds without disruption.