Bank lending to households increases 300 billion won in June

Household loans extended by banks in Korea grew for the third straight month in June as home-backed lending picked up due largely to loan demand for home rentals, central bank data showed Tuesday.

Outstanding household loans were 1,060.8 trillion won ($808.3 billion) as of end-June, up 300 billion won from a month earlier, according to the data from the Bank of Korea.

It marked the third straight month of rises, but the amount grew at a slower pace than in May, when the corresponding increase was 400 billion won.

The bank said household loans increased last month as housing-related loan demand expanded despite rising borrowing costs.

Home-backed loans had grown 1.4 trillion won on-month to 789.1 trillion won as of end-June. The June rise accelerated from an 800 billion won on-month increase in May.

Unsecured and other non-mortgage loans, however, fell 1.2 trillion won to 270.4 trillion won last month due mainly to rising lending rates.

Borrowing costs have been on the rise as the central bank raised the policy rate in a bid to tame inflation and curb household debt.

In May, it upped the rate by a quarter percentage point to 1.75 percent, the fifth increase since August last year. The central bank will hold its rate-setting meeting Wednesday, with market players looking at the possibility of an unprecedented "big-step" hike of 50 basis points.

Household loans extended by banks and non-banking institutions grew by 700 billion won on-month in June, slowing from a 1.7 trillion won gain the previous month, according to separate data from the Financial Services Commission.
But in the first half, such household loans fell 800 billion won from six months earlier, marking the first half-year decline since 2015, when the financial regulator started compiling related data.

Corporate lending rose for the sixth straight month in June as lenders ran loan programs to help businesses cope with a fund shortage amid the pandemic.

Their corporate loans had stood at 1,125.2 trillion won as of end-June, up 6 trillion won from a month earlier, the data showed. It marked the largest increase for any June since 2009, when the central bank began compiling related data.
Yonhap