South Korea's retail investors face massive margin calls as banks exhaust loan limits

South Korea’s five biggest banks have used more than 85% of their annual home‑loan growth quota by the end of June, leaving only limited capacity for new credit in the second half of the year. The rapid consumption of the quota was driven by a surge in retail borrowing for both stock‑market speculation and housing demand, prompting regulators to warn that tighter lending could curb the momentum of the equity market.

At the same time, data from the Financial Supervisory Service show that over 1.2 million leveraged retail accounts have triggered margin calls, with roughly 320,000‑360,000 accounts fully liquidated and some investors ending up with negative balances that owe money to brokers. This means about one in 30 South Korean adults between 15 and 64 years old has faced a margin call, highlighting the widespread use of leverage among households and the systemic risk it poses.

The convergence of exhausted loan quotas and a wave of forced liquidations underscores mounting financial strain on Korean households and raises concerns about future volatility in both the stock and cryptocurrency markets.