SEOUL — Household loans from banks in South Korea have risen for the fourth consecutive month in July, primarily driven by an increase in mortgage loans.
According to Yonhap News Agency, This trend persists even as the central bank maintains a restrictive monetary policy stance. The data from the BOK shows that banks' outstanding household loans reached 1,120.8 trillion won ($821 billion) at the end of July, marking a 5.5 trillion won increase from the previous month. This rise, however, represents a slowdown compared to June's 5.9 trillion won increase. Specifically, home-backed loans increased by 5.6 trillion won to 882.5 trillion won, while unsecured and other types of loans saw a minor decrease.
Despite ongoing rate holds, with the key interest rate maintained at 3.5 percent for the twelfth consecutive session, borrowing costs remain high due to the Bank of Korea's aggressive rate hikes aimed at curbing inflation. The BOK's chief has noted that conditions are aligning for a potential shift in monetary policy, although he cautioned that expectations for an imminent rate cut might be overly optimistic.
Furthermore, loans to companies also saw an uptick, with a 7.8 trillion won increase in July, reflecting a robust economic environment. Meanwhile, household loans from all financial institutions, including savings banks and insurance firms, also showed an increase, suggesting continued demand for credit in various sectors of the economy.