South Korean banks’ total outstanding mortgages extended to households gained 6.4 trillion won ($5.6 billion) on-month in February, central bank data showed Wednesday, with the figure marking the second-largest increase for the month.

Outstanding mortgages stood at 733.3 trillion won as of end-February, according to the Bank of Korea.

The 6.4 trillion-won gain was the second-largest increase in the month of February the BOK has seen since it started compiling such data in 2004.

Of the gains in mortgages, outstanding jeonse-related loans extended to households gained 3.4 trillion won in the same period, compared to the January reading of 2.4 trillion won. Jeonse is a home rental system unique to Korea whereby tenants pay a lump-sum refundable deposit instead of monthly rent.

“The increase in mortgages was driven by higher demand in jeonse-related loans,” a BOK official said in a briefing.

“Jeonse prices and increased demand for homes at the beginning of the school year has pushed up this month’s reading,” the official added.

Jeonse prices in Seoul and other major areas have skyrocketed in recent months, as an apparent side effect of the Moon Jae-in administration’s unsuccessful attempt to cool down the heated housing market.

As of December last year, the average price of a jeonse in the capital city had gained roughly 100 million won in five months to 567 million won, according to KB Kookmin Bank’s real estate services platform Liiv On.

Overall, the total value of outstanding bank loans extended to household loans gained 6.7 trillion won on-month in February, which slightly lost momentum compared to the previous month. The figure came to 1,003.1 trillion won as of end-February.

The value of nonmortgage loans gained 300 billion won in the cited period, with unsecured loans accounting for the majority of the pie.

South Korean households have been flocking to banks since early last year to borrow loans at record-low interest rates. Market watchers have been expressing concerns of an expected surge in loan delinquency, which could throw banks off balance.

According to the Financial Supervisory Service on Wednesday, the delinquency rate for won-denominated loans more than 30 days overdue edged up 0.03 percentage point on-month to 0.31 percent as of end-January. It remains stable for the time being due to the government‘s requests to banks to extend loan maturity and delay interest payments for borrowers financially hit by the COVID-19 pandemic. But for the same reason, onlookers worry that this may be the “calm before the storm.”

By Jung Min-kyung (mkjung@heraldcorp.com)