Seoul: Household loans extended by South Korean banks added more than 4 trillion won (US$2.87 billion) in August, data showed Sunday, despite aggressive restrictions implemented earlier in the year to curb rising household debt and housing prices.
According to Yonhap News Agency, household loans extended by banks increased 4.2 trillion won this month as of Thursday, sharply up from the 2.2 trillion won on-month growth in July, which marked the smallest increase since March.
In an effort to curb rising household debt and housing prices, authorities in late June imposed a 600 million-won cap on mortgage loans for property purchases in the capital region, while suspending home-backed loans for multi-homeowners.
The growth picked up in August due to a rise in unsecured and other types of household loans. While the government believes the latest restrictions have eased the market's overheating to some extent, it is mulling additional regulations for the real estate market, including tightening the loan-to-value (LTV) ratio, according to market observers.
The LTV ratio is a key regulatory tool used to curb household loans, as it limits the maximum amount homeowners can borrow based on the value of their collateral. The ratio is currently set at 50 percent for anti-speculation areas in Seoul, with market watchers anticipating a tighter 40 percent ceiling.
Net interest margins among South Korea's top five banks, the difference between interest received and paid, meanwhile, approached the highest levels since 2022, when financial regulators made public disclosure mandatory. The wider gap apparently came as the banks refrained from lowering lending rates amid the government's tighter control of household debt, while deposit rates fell to the lowest levels in more than three years.
From a month earlier, KB Kookmin Bank's net interest margin rose 0.1 percentage point in July, followed by Nonghyup Bank with a 0.07 percentage point increase and Hana Bank with a 0.04 percentage point on-month gain.