This undated file photo shows a woman walking past a bank promoting its mortgage loan products in Seoul. (Image courtesy of Yonhap)
SEOUL, Aug. 20 (Korea Bizwire) – South Korea’s household credit rebounded sharply in the second quarter of the year as home-backed loans increased in the face of tightened lending criteria and high rates, central bank data showed Tuesday.
Outstanding household credit reached 1,896.2 trillion won (US$1.419 trillion) at the end of June, up 13.8 trillion won from three months earlier, according to the preliminary data from the Bank of Korea (BOK).
The second quarter marks a rebound from the previous quarter’s 3.1 trillion-won fall, according to the data.
Household credit refers to credit purchases and loans to households by financial institutions.
The rise in household loans came despite high borrowing costs, driven by the BOK’s series of interest rate hikes to bring inflation under control, and tightened lending criteria.
Last month, the country’s central bank froze its key rate for the 12th straight session at 3.5 percent amid moderating inflation and high household debts.
The rate freezes came after the BOK delivered seven consecutive rate hikes from April 2022 to January 2023.
This week, the central bank is also expected to stand pat given accelerating household loans.
Of the total, household loans stood at a record high of 1,780 trillion won at the end of June, up 13.5 trillion won from three months earlier.
Mortgage loans increased by 16 trillion won during the second quarter of the year, accelerating from the previous quarter’s 12.4 trillion-won rise, and other types of household loans fell 2.5 trillion won over the cited period, compared with the previous quarter’s 13.2 trillion-won fall.
(Yonhap)
