South Korea’s household loans extended by local financial institutions increased by more than 4 trillion won ($3.56 billion) in April from a month ago, the biggest on-month jump in five months mainly driven by a rise in mortgage-backed loans during the typical moving season.
According to data released by the Bank of Korea on Monday, outstanding household loans including policy mortgages extended by local banks came to 718.6 trillion won in April, up 4.6 trillion won from a month earlier. It is the largest monthly increase since November when 8.8 trillion won worth of more loans were borrowed from banks.
In January, outstanding household loans grew at the slowest rate in three years, adding 69 billion won from a month ago before picking up by 2.93 trillion won in February and 2.94 trillion won in March. The latest increase is also double the average 2.2 trillion won surge in April from 2010 and 2014.
By loan type, mortgage loans from banks amounted to 541.8 trillion won in April, up 3.3 trillion won from a month ago. According to BOK data, collective loans by new apartment buyers have steadily increased while demand for move has grown in the typically peak season for moving in spring.
Other loans including credit card spending reached 175.9 trillion won in April, up 1.3 trillion won which was also the biggest on-month growth in the sector since November with a 2.7 trillion won gain and much larger than a 300 billion won addition in March. The increase also more than doubled from the 700 billion won growth a year ago.
The BOK said that although the gain in household loans has slowed down compared to April of 2015 and 2016 when the amount rose by 8.5 trillion won and 5.2 trillion won, respectively, concerns still remain over rising household debts. In 2015 and 2016, household loans rose at faster rates driven by the government’s measures to stimulate the country’s property market, coupled with low interest rates.
By Boo Jang-won
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]