Household loans at South Korea's major banks declined in September for the first time in six months, financial data showed Sunday, as lenders continue to strictly manage the pace of borrowing.

Outstanding household loans at the country's five major lenders -- KB Kookmin Bank, Shinhan Bank, Hana Bank, Woori Bank and NH NongHyup Bank -- stood at 781.39 trillion won ($580.49 billion) as of Thursday, down 727.6 billion won from the end of August, according to data compiled by the banks.

The drop marks the first month-on-month decline in the outstanding figure since March.

Outstanding mortgage loans among the five lenders came to 620.5 trillion won as of Thursday, down from 621.2 trillion won at the end of August.

The decline came despite the government having relaxed its cap on household loans, with banks maintaining their self-imposed loan restrictions, industry officials said. The gap highlights how lending patterns are shaped not only by regulatory caps but also by banks' own asset-quality and risk management decisions.

The five major lenders are said to have received additional quotas from financial authorities, lifting their annual target for household loan growth from 4.3 trillion won in 2025 to 7.1 trillion won this year.

Household debt has long been a key focus of South Korean financial policy, as the country's household debt burden relative to the size of its economy remains among the highest in major economies, making loan-growth trends a closely watched indicator for policymakers and markets.

"Once loan supply resumes, driven by collective lending, mortgage growth is highly likely to regain momentum in the near future," an official from a local bank said.

Excluding policy loans, outstanding household loans at the five major banks maintained an upward trend, rising by 108.7 billion won from the end of the previous month, the data showed. The distinction indicates the overall decline was driven largely by policy-linked lending, while market-based borrowing continued to expand. (Yonhap)