South Korea’s mortgage and personal loans rose sharply despite government efforts to cool the heated housing market and rein in household debt, data showed Wednesday.
The balance in mortgage-backed loans at the country’s five major commercial banks stood at 377.8 trillion won ($354.2 billion) in late December, up 15.1 trillion won from a year ago.
Although slowing from a 31.9 trillion won year-on-year gain in 2016, the household debt binge kept strong last year.
In August, authorities imposed a set of actions to tighten the loan limit for owners of multiple homes. Mortgage loans still added 2.46 trillion won in August and another 2.59 trillion won in September.
The government followed up with additional measures in October to curb household debt and in December to encourage multiple-home owners to register their properties as rentals to ensure stable housing. Despite such measures, mortgage loans climbed 2 trillion won each month during the period.
Personal loans also surged in what is seen as a balloon effect from the government’s mortgage curbs. Credit lending by the five commercial banks reached 97.4 trillion won late last year, up 7.22 trillion won from the previous year. The spike was especially marked after the August restrictions, gaining 4.84 trillion won during the five months after the government announcement.
The rise in mortgage and personal loans pushed up household liabilities to 528.3 trillion won as of the end of last year.
Colossal household debt poses one of the biggest dangers to the Korean economy as the central bank is expected to push up interest rates in line with the global tightening trend.
In November, the bank raised the benchmark rate for the first time in more than six years, lifting the record-low rate kept since June 2016 by a quarter percentage point to 1.50 percent.
By Kim Tae-sung and Kim Hyo-jin
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