As property sales suffer, household loans recede

Korean banks’ household loans declined in January from the previous month due to the sluggish housing market, the central bank said yesterday.

The total value, including home-backed and credit loans, reached 452.2 trillion won ($405 billion) as of the end of January, down 2.8 trillion won from the previous month, according to preliminary data released by the Bank of Korea (BOK).

The amount declined for the first time last month after posting consistent growth since last February, the data showed.

The government and financial watchdog have been trying to put a lid on mounting household debts as heavy indebtedness could squeeze private consumption, one of two growth engines powering the domestic economy.

Although household loans usually dip in January, the latest decline was “unusual” and was bigger than in previous years, the BOK said.

The latest drop was due to a slump in housing sales, which reduced demand for home-backed loans, the central bank said. A one-time tax break phase-out at the end of last year also led to diminished demand in January.

Home-backed loans fell by 800 billion won last month from December, compared with a 2.5 trillion won increase a month earlier.

Meanwhile, Korean banks’ corporate lending rose sharply in January from the previous month due to the seasonal factor, with growth especially prominent in loans issued to big corporations, the BOK said.

Yonhap