Seoul: Household loans extended by South Korean banks saw a notable increase in August, growing at a faster rate than in the previous month. This rise, observed despite stringent government regulations, was primarily driven by a jump in housing transactions, as per data released by the central bank on Wednesday.
According to Yonhap News Agency, the Bank of Korea (BOK) reported that banks' outstanding household loans reached 1,168.3 trillion won (approximately US$840.68 billion) by the end of August, marking an increase of 4.1 trillion won compared to the previous month. This growth represents an acceleration from the 2.7 trillion-won increase recorded in July.
The data further revealed that home-backed loans increased by 3.9 trillion won to 930.3 trillion won in August, compared to a 3.4 trillion-won rise in July. Unsecured and other household loans also experienced growth, climbing by 300 billion won to 237.1 trillion won, rebounding from a 600 billion-won decrease observed in the previous month.
"Despite the continued effects of the lending regulations announced in June, the volume of mortgage loans for home purchases increased, as the rise in housing transactions in May and June was reflected with a time lag," stated Park Min-cheol, a BOK official, during a press briefing. The government had introduced a 600 million-won cap on mortgage loans for properties in the capital region and halted home-backed loans for multi-homeowners to address rising housing prices.
Housing transactions have seen a surge, particularly in Seoul and its metropolitan vicinity, following banks' easing of household lending restrictions earlier in the year and the temporary suspension of land transaction permit requirements by the Seoul city government. Park further noted, "The recent rise in housing prices in Seoul was partly due to concerns over a supply shortage, so the government's recent announcement of supply measures is expected to somewhat help stabilize the housing market. The key is to implement them without delays."
In addition to household loans, corporate loans also experienced a significant rise, increasing by 8.4 trillion won in August from the previous month, following a 3.4 trillion-won gain in July. The total outstanding corporate loans amounted to 1,354.8 trillion won by the end of August, as per the BOK data.
The BOK highlighted that loans to large corporations rose significantly, from 500 billion won to 3.8 trillion won, attributed to the rising demand for debt repayment and securing operating capital.
Separate data from the Financial Supervisory Service (FSS) indicated that household loans extended by all financial institutions rose by 4.7 trillion won in August from the previous month, accelerating from a 2.3 trillion-won gain in July. Home-backed loans across all financial institutions, including savings banks and insurance firms, increased by 5.1 trillion won last month, up from the 4.2 trillion-won rise in July. Meanwhile, other types of loans extended to households decreased by 0.4 trillion won last month, in contrast to a 1.9 trillion-won decline in the previous month.