SEOUL– South Korean banks’ loans to households grew at a slower pace in October, central bank data showed Wednesday, amid the government’s tightened regulations on lending amid worries about soaring household debt.
Banks’ household loans stood at 1,057.9 trillion won (US$897.3 billion) as of end-October, up 5.2 trillion won from a month earlier, according to the data by the Bank of Korea.
The on-month growth slowed from a 6.4 trillion won rise in September. It is also much smaller than an increase of 10.6 trillion won in the same month a year earlier, the data showed.
Of the total household loans, mortgage loans gained 4.7 trillion won on-month in October to 774.5 trillion won, a slower pace of expansion from the previous month’s increase of 5.6 trillion won.
South Korea has been tightening its regulation of household debt amid worries that soaring household borrowing could weigh on economic recovery.
In October, the government announced it will enforce stricter lending rules based on borrowers’ repayment capability through the debt service ratio from January next year to curb soaring household debt.
The central bank kept its key policy rate at 0.75 percent in October but is widely expected to raise the rate later this month to rein in inflation and household debt.
Banks’ loans to businesses, however, expanded at a faster pace.
Banks’ loans to companies had come to 1,059.3 trillion won as of end-October, up 10.3 trillion won from a month earlier. The figure is larger than an increase of 7.7 trillion won tallied in September, the data showed.
A separate report jointly compiled by the Financial Services Commission and the Financial Supervisory Service said household loans extended by banks and non-banking institutions grew 6.1 trillion won in October from a month earlier, slowing from a 7.8 trillion won rise in September.
Their home-backed loans expanded 5.3 trillion won over the same period, also slowing down from an increase of 6.7 trillion won a month earlier, the report said.
The regulators said the growth in loans is showing signs of stabilizing after peaking in July, adding they will make continued efforts to achieve a “soft-landing” for the household debt problem.
Source: Yonhap News Agency