Seoul: South Korea’s household credit increased at the fastest pace in seven months in May amid a recovery of the housing and stock markets, financial data showed Sunday. Outstanding household credit extended by all financial institutions, including commercial banks, savings banks, and insurance and securities firms, rose by around 6 trillion won (US$4.3 billion) from a month earlier in May.

According to Yonhap News Agency, it is the largest on-month increase since October, when household loans expanded 6.5 trillion won from the previous month. Outstanding loans from the country’s five major commercial banks, including KB Kookmin Bank, Shinhan Bank and Hana Bank, rose by 4.2 trillion won to 747.3 trillion won last month. In particular, unsecured loans extended by the five banks came to 103.6 trillion won as of end-May, up 1.08 trillion won from a month ago, marking the biggest jump in almost four years.

A commercial bank official commented, “Household lending has been increasing as expectations of further interest rate cuts coincided with hopes that housing prices will rise after the presidential election.” The Bank of Korea slashed its benchmark interest rate by a quarter percentage point to 2.5 percent Thursday in an effort to prop up economic growth amid sluggish domestic demand and uncertainties stemming from Washington’s sweeping tariff scheme.

The official further noted, “It appears that more customers are also using unsecured loans for investments in stocks and virtual assets,” suggesting that “loan demand is likely to remain high for the time being.”