With the spring home moving season coming, the amount of "jeonse" loans extended by the banking industry has shot up. Jeonse refers to Korea's unique home rental scheme in which a tenant pays a large lump-sum deposit for a typically two-year rental period.
During the month of February, the banking industry's jeonse loans rose by more than 1 trillion won, the second-highest monthly growth in two years.
According to industry sources on March 19, the balance of jeonse loans for the nation's top-five commercial banks, namely Shinhan, Kookmin, Woori, Hana KEB, and Nonghyup, amounted to 35.7 trillion won as of the end of February 2017, up by 1.26 trillion won from 34.5 trillion won a year ago.
The growth rate is 2.77 times higher than that of January (458 billion won) and 1.7 times higher than a year ago (753.1 billion won). This figure was the second-highest monthly growth since January 2015, right behind the 1.5 trillion-won-growth in October 2016.
Key factors behind the surge in jeonse loans is the increase in demand ahead of the spring home moving season.