Household lending at mutual finance institutions increased by about 3 trillion won last month, and following Saemaul Geumgo, NongHyup has decided to sharply raise its lending threshold. This comes as local-level NongHyup units decided to block new household loans to non-members. It appears the financial authorities are ramping up pressure to manage household debt and to prevent a balloon effect of borrowing shifting to the secondary financial sector.

According to the Financial Services Commission on the 8th, in its report titled ‘Household Lending Trends for March 2026,’ total household loans across the financial sector in March increased by 3.5 trillion won, a larger rise than in the previous month (+2.9 trillion won).

Household loans at banks grew only modestly, by 500 billion won. Within that, mortgage lending at banks increased by only 3 billion won.

Most of the increase came from the secondary financial sector (+3 trillion won). Within that, mutual finance rose by 2.7 trillion won, recording around 3 trillion won of growth for a second consecutive month after February (3.1 trillion won). In particular, NongHyup increased by 1.9 trillion won and Saemaul Geumgo by 600 billion won, leading the rise. In the mutual finance sector, household loans are largely concentrated in mortgages.

At NongHyup, the cumulative increase in household loans through March reached 5.1 trillion won. In just three months, that easily exceeded the full-year increase at NongHyup last year (3.6 trillion won). Given that the authorities set the target growth rate for NongHyup household lending this year at 1%, the limit had already been exceeded by March.

At Saemaul Geumgo, the cumulative increase through March was 2.4 trillion won, nearly half of the annual increase last year (5.3 trillion won).

The financial authorities cited the increased intake of group loans early in the year as the cause of the surge. An official at the Financial Services Commission said, “It reflects the sequential booking of group loan disbursements that were approved prior to the suspension of new lending at mutual finance institutions.” Saemaul Geumgo and NongHyup have suspended relocation and interim-payment loans since last month.

In addition, the NongHyup Central Federation recently instructed agricultural and livestock cooperative units nationwide that any cooperative with a year-on-year increase in household lending exceeding 1% must fully halt new household loans to non-members and associate members. Cooperatives keeping the increase at 1% or below may allow loans to non-members only within their designated business areas. The NongHyup Central Federation stated, “This measure will remain in place until household debt falls within the government household-debt management target.”

After Saemaul Geumgo and credit unions halted group loans early in the year, loan demand flowed to NongHyup, which offered relatively lower rates; the latest measure is seen as aiming to block this. As a result, there are assessments that lending supply across the mutual finance sector has effectively approached a ‘shutdown’ state.

Some in the financial industry warn that if lending thresholds in the mutual finance sector are raised, vulnerable borrowers with low credit scores could face a ‘loan cliff’.

Seo Ji-yong, a professor in the Department of Business Administration at Sangmyung University, said, “As a result, even in the secondary financial sector, lending ends up focusing on borrowers with high credit, so low-credit individuals could knock on the doors of lenders charging the legal maximum interest rate,” and added, “The government total lending cap may align with policy objectives in the short term, but if it continues, there could be unintended victims.”