Banking-sector financing margin loans hit a record 36.47 trillion won this year,
double a year earlier. When brokerages pushed margin requirements toward 10%,
retail investors shifted into bank credit instead; household bank lending rose
9.3 trillion won in May, the fastest monthly gain since Aug 2024. The Bank of
Korea links the surge to equity investment rather than mortgages. Middle-aged
and older Koreans are borrowing to buy stocks and typically deploy larger sums
than younger investors; Korea has about 102 million active trading accounts
versus a population of 52 million. Despite foreigners’ net sales of 120 trillion
won of Korean equities year-to-date, retail investors have net bought 75
trillion won, largely with borrowed funds. Key stress signals: household
debt-to-income ratio 174%; 44% of borrowers reported delinquencies or missed
payments in the past six months; banks are restricting lending after annual
quotas were exhausted months early; broker margin rates are near 10%. Markets
currently price a Bank of Korea rate hike next month; higher policy rates would
raise the cost of equity financing and bank credit and, if markets fall, could
trigger severe forced selling of leveraged positions.
