Household loans keep rising

Household loans offered by Korean depository institutions rose in February, the central bank said yesterday, despite the government’s ongoing efforts to curb private debts.

Household lending handled by local banks and nonbank institutions totaled 640.3 trillion won ($562.8 billion) as of the end of February, up 1 trillion won from the preceding month, according to the Bank of Korea.

The monthly increase follows a drop in household loans tallied for the previous month. January’s news marked the first decline in two years and followed a peak in outstanding household loans that reached 642.7 trillion won in December.

The central bank said the increase was fueled by a rise in home mortgage loans extended by both banks and nonbank institutions.

The modest rise in household debts comes as the government has been trying to control the rise in household credit out of concern that heavy indebtedness in the private sector would squeeze consumer spending and slow economic recovery.

Banks’ household loans, including home-backed lending, rose by 500 billion won on-month to 453.5 trillion won as of the end of February, while total household loans from nonbank institutions also increased by 500 billion won to 186.7 trillion won over the same period, the BOK said.

Of the loans given by banks, housing loans went up by 600 billion won to 308.6 trillion won but credit loans dipped by 100 billion won to 145.0 trillion won. Yonhap