Household loans by major banks rise in June by most in 10 months on surge

SEOUL, July 1 (Yonhap) — South Korea’s household loans extended by major banks spiked in June by the most in 10 months on a rise in mortgages, industry data showed Tuesday.

Outstanding household loans extended by five major commercial banks, including KB Kookmin Bank, Shinhan Bank and Hana Bank, stood at 754.83 trillion won (US$556 billion) at the end of last month, up 6.7 trillion won from a month ago, according to the banking industry data.

The June tally marks an acceleration from May’s 4.99 trillion-won on-month gain and the sharpest gain since August last year, when the comparable reading was 9.62 trillion won.

Banks had eased some of their lending regulations at the beginning of the year, while demand for loans went up in the season for moving.

The Seoul municipal government had also lifted part of the so-called land transaction permission zones imposed in some areas of Seoul’s Gangnam, Seocho and Songpa, in February, leading to a marked increase in real estate prices in such areas, which in turn fueled household loans.

The banks’ mortgage loans increased 5.76 trillion won last month, accelerating from the previous month’s 4.23 trillion-won gain, according to the data.

Starting this week, the Financial Services Commission (FSC) required all lenders to sharply reduce their household lending, while home-backed loans for home purchases in the capital area are capped at 600 million won (US$442,000) in an unprecedentedly aggressive move to rein in rising household debts.

Earlier, the FSC said tighter DSR rules are applied to virtually all kinds of household debts beginning this month, and the stress interest rate is raised to 1.5 percent from the current 0.75 percent on loans extended in the greater Seoul area.

The stress interest rate for household loans extended outside of the capital area will remain unchanged at 0.75 percent.

sam@yna.co.kr
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