South Korean banks to tighten household lending standards in Q3

This was due to the strengthening of household debt regulations.

South Korean banks plan to broadly tighten their lending standards, especially to households, in the third quarter of 2025.

According to a Loan Officers’ Survey by the Bank of Korea, the move was attributed to the strengthening of household debt regulations.

The index measuring lending standards showed a slight easing for large companies (6) and a modest tightening for small and medium-sized businesses (-6).

For households, lending standards are expected to become significantly more restrictive, with mortgage loans at -31 and other personal loans at -22.

Concerns about credit risk remain high. Risk levels for large corporations and SMEs were reported at 8 and 17, respectively.

Household-related credit risks were also elevated, with both mortgage and other personal loans scoring 14.

Furthermore, the survey noted that demand for corporate loans and unsecured household loans is expected to increase, whilst demand for household mortgage loans is likely to decline.

Companies, particularly SMEs, are projected to seek more loans, with demand indices at 6 for large firms and 25 for smaller ones.

On the household side, demand for household mortgage loans came in at -6, whilst demand for other household loans came in at 6.