Household lending growth slows as people pay debts with holiday bonuses

Home > Business > Finance

print dictionary print

Household lending growth slows as people pay debts with holiday bonuses

A banner in Seoul promotes a bank's loan programs. [YONHAP]

A banner in Seoul promotes a bank's loan programs. [YONHAP]

 
The growth of household loans extended by banks slowed in February as people paid back credit loans using holiday bonuses.  
 
Banks' outstanding household loans totaled 1,100.3 trillion won ($840 billion) as of the end of February, up 2 trillion won on-month, according to the data from the Bank of Korea (BOK) on Wednesday.
 
The February gain decelerated from a 3.3 trillion-won rise the previous month and marked an on-month increase for the 11th month in a row, the data showed.
 
Banks' home-backed loans rose 4.7 trillion won to 860 trillion won last month, decelerating from a 4.9 trillion won on-month gain the previous month, while unsecured and other types of loans fell 2.7 trillion won to 239.1 trillion won over the cited period, according to the data.
 
Policymakers remained worried over a spike in household debt, which could sap further private spending.
 
Borrowing costs in Asia's fourth-largest economy remain high following the BOK's aggressive monetary tightening to control surging inflation.
 
Last month, Korea's central bank held its key interest rate steady at 3.5 percent amid a slowdown in growth and moderating inflation.
 
This marked the ninth straight time the BOK has stood pat since freezing the rate in February of last year. The rate freezes came after the BOK delivered seven consecutive rate hikes from April 2022 to January 2023.
 
Banks' loans to companies also rose 8 trillion won last month, following the previous month's 6.7 trillion won rise, the data showed.
 
Meanwhile, the financial regulator said household loans extended by all financial institutions, including banks, shrank 1.8 trillion won from a month earlier in February, marking the first on-month decline since March 2023.
 
Home-backed loans increased by 3.7 trillion won, while those extended by non-bank lenders, such as insurance firms and brokerages, shrank by 1 trillion won, according to the Financial Services Commission.
 
Non-mortgage loans dropped by 5.5 trillion won, accelerating from a 3.3 trillion won decline in January.
 
“Household loans are complexly interconnected with the housing economy, government support [for loans], regulations and interest rate level,” said the BOK. “Uncertainties in the housing market remain high, but low growth is expected to continue for the time being.”
 

BY JIN MIN-JI, YONHAP [[email protected]]
Log in to Twitter or Facebook account to connect
with the Korea JoongAng Daily
help-image Social comment?
s
lock icon

To write comments, please log in to one of the accounts.

Standards Board Policy (0/250자)