SEOUL, Oct. 12 (Korea Bizwire) – Household loans extended by local banks rose 11.8 percent in September from a year earlier due to an increase in collective loans, central bank data showed Wednesday.
Outstanding household loans from local lenders came to 688.4 trillion won (US$613 billion) as of end-September, compared with 615.7 trillion won from a year earlier, according to the data from the Bank of Korea (BOK).
Compared with August this year, the amount rose by 6.1 trillion won. The on-month increase marked a decline from an 8.6 trillion-won gain in the previous month.
“Mortgages increased 5.3 trillion won from the previous month in September due to a rise in demand for collective loans,” the BOK said. Collective loans are often associated with the reconstruction of old apartments.
Earlier this week, Yim Jong-yong, chairman of the Financial Services Commission, vowed to tighten the oversight of local banks and other lenders to curb household debt.
South Korea remains gripped by soaring household debt, which economists fear could dampen consumer spending.
The BOK slashed the key rate to a record low of 1.25 percent in June in a bid to help revitalize the economy. Analysts said they expect the BOK to hold the key rate steady at a record low 1.25 percent for October.
In September, local lenders’ outstanding corporate loans came to 752.7 trillion won, gaining 1.8 trillion won from the previous month.