BOK Survey Shows South Korean Banks Expect Tighter Household Lending in Third Quarter

According to Yonhap, South Korean banks are expected to tighten lending standards for households in the third quarter as credit risks rise, according to a Bank of Korea survey. The lending attitude index for July-September came in at minus 7, down from minus 2 in the previous quarter, based on the survey of 203 financial institutions, including 18 banks. A reading below zero means most lenders plan to tighten standards. The index has remained negative for six straight quarters since the second quarter of 2025 as South Korea's financial authorities have kept tightening household-lending rules since late 2024 to curb surging household debt and rising housing prices in Seoul and surrounding regions. The Bank of Korea said both mortgage and non-mortgage household loans are expected to be tightened as the government's regulatory efforts continue. Lending attitudes toward large corporations and small and medium-sized enterprises are forecast to stay unchanged, while demand for household mortgage loans is likely to fall and demand for general household loans is projected to rise on continued interest in stock market investment funds. Demand for corporate loans is also expected to increase for both large firms and SMEs amid heightened uncertainty tied to the Iran crisis.