SEOUL, KOREA - The balance of loans outstanding made out to households in January has turned to a declining trend after 11 months, largely due to the expiration of a special tax holiday for those purchasing homes last year. According to data published by the Bank of Korea on March 11, the total balance of household loans held by banks and non-banking deposit-accepting financial institutions was 685,190.7 billion won.

 

This is the first time in which month-on-month balance shrank since February last year. This is 1,995.7 billion won lower than December's 687,186.4 billion won, which was the record-high level.

 

The decline was largely because first-time home buyers are no longer given a special tax exemption privilege, as well as because of seasonal factors including fewer people move during cold winter months. The excise-tax exemption offer and the five-year limited-time tax break for second-home buyers have expired at the end of 2013. Other factors such as salaried workers paid down their debts with end-of-the-year bonuses were partially responsible for the fall.

 

By region, the Seoul metropolitan area saw its outstanding loan balance decline 1.4 trillion won to 420.1 trillion won while non-Seoul areas saw the balance down 60 billion won to 265.1 trillion won.