S. Korea Financials: Korea Banks to Further Tighten Mortgage Lending

Research evidence excerpt

S. Korea Financials: Korea Banks to Further Tighten Mortgage Lending

Update

July 9, 2026 12:59 PM GMT

Morgan Stanley & Co. International plc, Seoul Branch+MS. Korea Financials | Asia Pacific Joon Seok

Equity Analyst

Korea Banks to Further Tighten Joon.Seok@morganstanley.comHeewon Choi +82 2 399-4934

Heewon.Choi@morganstanley.com +82 2 399-4836

Mortgage Lending Minseo Kang

Research Associate

Minseo.Kang@morganstanley.com +82 2 399-4816

Key Takeaways

Bank retail loans rose W7.6tn M/M in June, with mortgages up W4.3tn, the

largest monthly mortgage gain since June 2025.

Jeonse loans fell W0.7tn; stronger Apr-May Seoul Metro apartment transactions

drove mortgage demand. S. Korea Financials

Asia Pacific

YTD growth remains slower Y/Y at 1.3% for retail loans, but banks' buffer under Industry View Attractive

the government's tighter retail lending control plan is narrowing.

Kookmin Bank announced it will cut its mortgage limit from W600mn to

W300mn, and others are also reducing effective limits.

We think such tighter mortgage supply could shift some demand to non-bank

lenders while lifting effective mortgage rates.

Banking system retail-loan growth remains below last year’s pace as the policy tack

on lending is more restrictive. The five major banks’ 2026 retail-loan growth target

is about W4.3tn, but YTD growth already topped W3tn as of July 2, 2026, leaving

limited lending buffer. This suggests banks may begin to manage lending volumes

earlier than last year, especially housing loans tied to home purchases.

Kookmin Bank’s decision to reduce the cap is not an isolated move, but rather part

of broader bank-level credit tightening. Shinhan and Hana are also cutting lending

limits by suspending applications for MCI (Mortgage Credit Insurance/MCG

(Mortgage Credit Guarantee).