Outstanding household loans rose by 8.6% in Oct.

Korea’s household loans extended by banks rose 8.6 percent in October from a year earlier due to increased mortgages and other bank loans, central bank data showed Wednesday.

Outstanding household loans from lenders came to 756 trillion won ($678 billion) as of the end of last month, up from 695.7 trillion won a year earlier, according to the data by the Bank of Korea (BOK).

Compared with September, the amount rose by 6.8 trillion won.

Mortgages climbed 3.3 trillion won on-month to 564.3 trillion won in October due to a steady rise in demand for collective loans, according to the BOK. Collective loans are often associated with reconstruction projects involving old apartments.

The BOK said other bank loans, including lending through an overdraft line of credit, jumped 3.5 trillion won on-month to 190.8 trillion won due to a rise in demand for loans from two Internet-only banks.

Internet banks have gained popularity among Koreans as they offer services ranging from ordinary deposits to loans without face-to-face contact necessary for customers and without bank branches.

Last month, the government vowed to tighten mortgage rules for owners of multiple homes as part of efforts to ensure mounting household debt does not hurt the nation’s economy.

Finance Minister Kim Dong-yeon has said that a “pre-emptive response” is needed to slow down the growth pace of household debt as the nation’s household debt-to-gross domestic product, which stood at more than 90 percent, is higher than that of other nations.

Household debt stood at 1,388.3 trillion won at the end of June, up 10.4 percent from a year earlier, according to the BOK.

YONHAP