Household lending by South Korea’s five major banks rebounded sharply in February 2025 after recording its first decline in 10 months in January.

According to industry sources on Monday, the total household loan balance at the country’s five major banks increased by 1.6 trillion won ($1.11 billion) in the first two weeks of February, totaling 735.26 trillion won as of February 14th.

Mortgage loans rose by 1.11 trillion won while credit loans grew by 490.7 billion won.

The five banks are KB Kookmin, Shinhan, Hana, Woori, and NH NongHyup.

Household loans had contracted in January, with the total loan balance falling by 477.2 billion won compared to December 2024.

Credit loans saw a particularly sharp decline, plummeting by 1.59 trillion won, reflecting the ongoing lending restrictions imposed by financial regulators throughout 2024 and into January. However, the combination of falling market interest rates and banks’ need to expand assets early in the year has contributed to the sharp increase in lending this month.

Market rates have been steadily declining.

According to the Korea Federation of Banks, the Cost of Funds Index (COFIX)—a key reference rate for variable-rate loans—fell to 3.08 percent in January, down 0.14 percentage points from the previous month. This is the fourth consecutive month of decline since COFIX peaked at 3.4 percent in September 2024 and represents the largest drop in a year.

Since COFIX is directly applied to variable-rate mortgage loans, these changes take effect immediately the following day.

Benchmark bond yields, which influence mortgage and unsecured loan rates, have also fallen. The five-year financial debenture rate, a key reference for mortgage rates, dropped from 3.0537 percent on January 17th, 2025, to 2.9977 percent on February 17th, breaking below the 3 percent threshold. Similarly, the six-month financial debenture rate declined from 3.0447 percent to 2.9582 percent over the same period.

Banks determine their final lending rates by adding risk premiums and other markups to these benchmark rates. At Woori Bank, for example, the five-year variable-rate mortgage loan range fell from 4.17–5.37 percent on January 17th to 4.12–5.32 percent on February 17th.

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