Household Loan Growth Continues to Rise as Regulatory Measures Remain Uncertain.

Seoul: Household loan growth continued in October, with a slight increase from the previous month, announced Kim Byoung-hwan, the head of the Financial Services Commission (FSC) on Wednesday. Despite the sustained growth, Kim indicated uncertainty regarding the implementation of tightened curbs on loans for home rent within the year. According to Yonhap News Agency, Kim Byoung-hwan shared with reporters that the final data on household loan growth is still being compiled. He emphasized that any potential measures to curb household loans will undergo review at a later stage. "We see that household loan growth (in October) was a bit higher than September, but we don't expect any gains to be high," Kim explained, highlighting the surge in loans in the non-banking sector compared to the previous month. Data indicates that household loans extended by banks in South Korea rose for the sixth consecutive month in September, primarily driven by an increase in mortgages. Banks reported an increase of 5.7 trillion won (US$4.13 billion) in outstanding household loans, marking a significant slowdown from the 9.2 trillion-won gain in August, which was the highest on-month increase in the past 37 months. Moreover, banks' home-backed loans experienced a 6.2 trillion won increase from the previous month, reaching 896.8 trillion won in September. This growth also decelerated from the record 8.2 trillion-won rise earlier, the largest on-month increase in South Korea's history. Policymakers attribute the recent surge in home prices, especially in the Seoul metropolitan area, as a key factor driving the sharp increase in mortgages. In response to these developments, the Bank of Korea recently reduced its benchmark rate by a quarter percentage point to 3.25 percent for the first time in 38 months. This decision aims to address slackening domestic demand and moderating inflation. However, the FSC chief remains uncertain about the timing of implementing tighter restrictions on "jeonse" loans, a unique Korean rental system where rente rs provide landlords with a substantial returnable deposit instead of monthly rent.