SEOUL - South Korea's household credit surged at a record pace in the third quarter of 2022, as indicated by data from the Bank of Korea (BOK). Despite high borrowing costs, there was a sharp increase in home-backed loans, reflecting the nation's economic and financial dynamics.
According to Yonhap News Agency, The BOK's preliminary data revealed that the total outstanding household credit reached 1,875.6 trillion won (approximately US$1.46 trillion) at the end of September, marking an increase of 14.3 trillion won from the previous quarter. This increase is the highest recorded.
Household credit, which encompasses credit purchases and loans to households by financial institutions, rose in spite of the central bank's series of interest rate hikes aimed at controlling inflation. In January, the BOK raised its key interest rate by a quarter percentage point to 3.5 percent, the seventh consecutive increase since April last year. However, the rate has remained unchanged since then, amidst slowing inflation and an economic slowdown.
The record increase in household loans includes a significant rise in mortgage loans, which went up by 17.4 trillion won in the third quarter compared to the previous three months. Other types of household loans also saw an increase of 2.6 trillion won during the same period.