SEOUL, Nov. 11 (Korea Bizwire) – Household loans extended by local lenders increased at the fastest clip last month, central bank data showed Wednesday, amid the rising possibility of a looming U.S. rate hike.
Outstanding household loans extended by local banks reached 624.8 trillion won (US$539.3 billion) as of the end of October, up 9 trillion won from the previous month, according to data from the Bank of Korea (BOK).
The on-month gain is the largest-ever since January 2008 when the central bank started to compile related data, breaking the previous record gain of 8.5 trillion won tallied in April.
The sharp increase was largely attributed to a rise in demand for mortgage loans, which rose to a balance of 465.1 trillion won last month, up 7 trillion won on-month.
“Home-backed household loans expanded due to upbeat new apartment sales,” the BOK said.
The number of home transactions in Seoul reached 11,007 in October, up 56 percent from 7,500 units, an average of October records in the past nine years.
Home-backed loans have steadily increased following a series of government measures aimed at revitalizing the property market, which included the easing of the loan-to-value and debt-to-income ratios last year.
In effort to help spur growth, the central bank also delivered four rate cuts in just over a year since June 2014, sending its key rate to a record low of 1.5 percent.