SEOUL, Jan. 4 (Korea Bizwire) – The growth of mortgage loans in South Korea markedly slowed last month amid indications of interest rate hikes and a downturn in the real estate market, data showed Wednesday.
Outstanding home-backed loans extended by six major banks here – KB Koomin, Shinhan, Woori, KEB Hana, NH and the Industrial Bank of Korea – totaled 380.8 trillion won (US$314 billion) in December.
It represents a 180 billion won increase from the previous month, the lowest growth for December since 2010.
Mortgage loans extended by the six lenders expanded 31.7 trillion won in 2015 from a year earlier, which breaks down to an average 2.64 trillion won rise per month.
The sharp slowdown came amid a downbeat outlook on the local property market, with market borrowing rates on the incline.
For instance, Shinhan Bank’s rate rose 0.36 percentage point in December from October.
The government has also tightened restrictions on housing-related borrowing in a bid to tackle the household debt problem dogging Asia’s fourth-biggest economy.
Experts said potential home buyers are apparently taking a wait-and-see attitude.
“Recently, the real estate market looks as though it’s losing vigor. Mortgage loans appear to be shrinking due to burden for interest rate hikes and concern about the oversupply of new houses,” Sohn Jung-rak, a researcher at the Hana Institute of Finance, said.
It remains unclear if the slowdown in mortgage loans is temporary or will last for a longer period, he added.