South Korean banks recorded a household general loan demand index of 31 for the second quarter of 2026, up 14 points from the previous quarter and the highest since 41 in the second quarter of 2020, during the early COVID-19 pandemic. The index, based on financial institution credit officers' assessments, measures whether loan demand increased from the prior quarter; a positive reading means more institutions reported rising demand than falling demand. While households' funding needs, particularly for living expenses, have increased, banks have tightened lending. The household general loan attitude index fell from -8 in the first quarter to -22 in the second, while the mortgage demand index rose to 11 from -8 and the mortgage lending attitude index declined to -19 from -6. Household credit risk rose to 31 from 19, its highest level since 39 in the first quarter of 2023. By contrast, banks' SME lending attitude index was positive at 11 despite SME loan demand and credit risk both standing at 22 and 31, respectively. The Bank of Korea expects household general loan demand to ease to 14 in the third quarter, with mortgage demand falling to -6, while household lending attitudes are forecast at -14 for general loans and -11 for mortgages. The figures suggest conservative household underwriting will continue as policy emphasizes productive finance and restraining household loan growth.