On Wednesday, data showed that South Korean banks’ household loans had increased to their greatest level in over two years in August due to a heightened demand for home-backed loans amid high borrowing costs.
The Bank of Korea’s (BOK) data revealed that the total amount of household loans had reached 1,075 trillion won (US$808.9 billion) at the end of August, a 6.9 trillion won jump from the month prior. This is the biggest increase since July 2021, when such loans rose 9.7 trillion won.
The August figure marks the fifth consecutive month of growth following a 5.9 trillion-won gain in July, 5.8 trillion-won rise in June, 4.2 trillion-won increase in May, and a 2.3 trillion-won gain in April.
Banks’ home-backed loans increased 7 trillion won to 827.8 trillion won in August, while unsecured and other types of loans decreased 0.1 trillion won to 246 trillion won over the same period.
The BOK has adopted an aggressive monetary tightening approach in an attempt to control rising inflation, resulting in high borrowing costs. Last month, the BOK held its benchmark rate at 3.5 percent, the fifth consecutive month of a rate freeze. This followed seven consecutive hikes in borrowing costs from April last year.
Due to the higher rates and a slowing economy, outstanding household loans decreased for the first time in 18 years in 2021.
sam@yna.co.kr
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