The Bank of Korea recorded the country’s loans to households grew in November, although at a slower pace due to the government increasing its control on home-backed loans and other lending.
According to the data from the central bank, as of end-November banks’ household loans stood at 1,060.9 trillion won (US$901.2 billion), up 3 trillion won from a month earlier. While on-month growth decelerated from 5.2 trillion won growth in the previous month.
Loan summary by banks in the country –
• In November, of household loans, mortgage loans grew 2.4 trillion won on-month to 776.9 trillion won. The rise however slowed from a 4.7 trillion won increase a month earlier.
• In the same month, unsecured credit-based loans grew 500 billion won on-month to 282.9 trillion won.
• The total amount of loans extended by financial firms in the reporting month, such as banks and non-banking firms also grew, but at a rather slower pace from a month earlier.
The Financial Services Commission and the Financial Supervisory Service reported financial institutions’ total household loans expanded in November by 5.9 trillion won on-month.
With growing worries that soaring household borrowing could weigh on economic recovery the country has been tightening its control on household debt growth.
The consequent increasing borrowing costs at banks and central bank’s decision to raise its key policy rate have also reportedly weighed on those seeking to take out loans.
The central bank earlier in November had raised its policy rate by a quarter percentage point to 1 percent to boost the pandemic-hit economy.
According to a BOK official, household loan growth in the reporting month slowed due to a mix of factors, such as tighter control on lending, seasonal reasons and rising borrowing costs. However, it also noted that more time is required to determine whether the overall upward trend has come to an end.
In the meantime, in November, the banks’ loans to businesses also grew at a slower pace, although growth trends still remained strong over high demand for funds from small companies due to the fallout from the pandemic.