South Korean mortgage delinquencies surge 120%

Mortgage loan delinquencies in South Korea's banking sector are rising at a rate significantly faster than the growth of total loan balances. According to data from the Financial Supervisory Service, domestic bank mortgage claims increased by 21% from the end of 2022 to June this year, while overdue principal and interest payments surged by 120% during the same period.

NH Nonghyup Bank reported the highest delinquency balance among major banks at over 511.7 billion won. Other notable figures include KB Kookmin Bank, Woori Bank, Hana Bank, and Shinhan Bank. Regional banks have also shown signs of instability; Jeonbuk Bank's mortgage delinquency rate jumped fivefold from 0.19% at the end of last year to 0.95% by June this year, driven largely by large-scale delinquencies in group loans for new housing developments.

In response to the growing risk, banks have tripled their loss provisions, increasing from 300 billion won in late 2022 to 900 billion won by June this year. Lawmakers have called for financial authorities to preemptively inspect risks related to vulnerable borrowers and group loan defaults.