SEOUL, June 12 (Yonhap) — Household loans extended by banks in South Korea rose for a second consecutive month in May, led by a rise in mortgage loan growth, central bank data showed Wednesday amid an extended restrictive monetary policy mode.
Banks’ outstanding household loans had come to 1,109.6 trillion won (US$805 billion) as of end-May, up 6 trillion won from a month earlier, according to the data from the Bank of Korea (BOK).
The May rise accelerates from the previous month’s 5.1 trillion-won advance and followed a 1.7 trillion-won fall in March, the data showed.
Banks’ home-backed loans rose 5.7 trillion won to 870.7 trillion won last month, accelerating from a 4.5 trillion-won on-month gain the previous month, while unsecured and other types of loans rose 0.3 trillion won to 237.8 trillion won over the cited period, according to the data.
Policymakers remained worried over a spike in household debts, which could sap further private spending.
Borrowing costs in Asia’s fourth-largest economy remain high following the BOK’s aggressive monetary tightening aimed at bringing surging inflation under control.
Last month, South Korea’s central bank kept its policy rate unchanged at 3.5 percent for the 11th consecutive time since February last year. The rate freezes came after the BOK delivered seven consecutive rate hikes from April 2022 to January 2023.
Banks’ loans to companies also rose 6.9 trillion won last month, following the previous month’s 11.9 trillion-won rise, the data showed.
This file photo, taken July 18, 2023, shows information about a bank’s loan programs in Seoul. (Yonhap)
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