Banks' household loans rise for third consecutive month

Finance

Published: 10 Jul. 2024, 18:40

Banks' household loans rise for third consecutive month

This file photo, taken July 18, 2023, shows information about a bank's loan programs in Seoul. [YONHAP]

Household loans extended by banks in Korea rose for the third consecutive month in June, led by a rise in mortgage loan growth, central bank data showed Wednesday amid an extended restrictive monetary policy mode.

Banks' outstanding household loans came to 1,115.5 trillion won ($805 billion) as of the end of June, up 6 trillion won from a month earlier, according to the data from the Bank of Korea (BOK).

The June rise came after the previous month's 6 trillion-won advance and followed a 5.1 trillion-won gain in April, the data showed.

Banks' home-backed loans rose 6.3 trillion won to 876.9 trillion won last month, accelerating from a 5.7 trillion-won on-month gain the previous month, while unsecured and other types of loans fell 0.3 trillion won to 237.4 trillion won over the cited period, according to the data.

Policymakers remained worried over a spike in household debts, which could sap further private spending.

Borrowing costs in Asia's fourth-largest economy remain high following the BOK's aggressive monetary tightening aimed at bringing surging inflation under control.

This week, Korea's central bank is widely expected to keep its policy rate unchanged at 3.5 percent for the 12th consecutive time since February 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 5.3 trillion won last month, following the previous month's 6.9 trillion-won rise, the data showed.

Meanwhile, the financial regulator said household loans extended by all financial institutions, including savings banks and insurance firms, gained 4.4 trillion won from a month earlier in June, slowing from a 5.3 trillion-won increase the previous month.

Home-backed loans added 6.1 trillion won, accelerating from a 5.6 trillion-won on-month rise in May, but other types of loans dipped 1.7 trillion won from a month earlier in June, according to the Financial Services Commission.

Yonhap