South Korea’s household credit jumped to a fresh record-high of 1,419.1 trillion won ($1,304.9 billion) as of the end of September, accelerating from past quarters and surging near 10 percent from a year ago despite a series of measures to contain housing loans.
Household credit, which includes household loans from banks and non-banks as well as outstanding credit card balance, added 31.2 trillion won in the third quarter from the previous three-month period and 122.7 trillion won from a year earlier, according to a data by the Bank of Korea (BOK) on Wednesday.
Household credit balance stretched to a largest-ever since the central bank started compiling such data from the fourth quarter of 2002.
Household debt growth picked up sharply from additions of 16.6 trillion won in the first quarter and 28.8 trillion won in the second quarter.
Mortgage-backed loans rose by 8 trillion won from July to September, overwhelming 6.9 trillion won gains in the first six months.
“The rise in household debt far exceeding the 3.0 percent estimate for annualized growth in the gross domestic product this year calls for pre-emptive actions,” a BOK official said.
The Korean government this year imposed a series of new measures such as tougher mortgage rules to rein in snowballing household debt. The spike in household loans despite stricter regulations pushes up the chance of the central bank lifting the policy rate for the first time in more than six years from the record-low of 1.25 percent kept unchanged since June last year.
The bond market which has bet on a rate hike from last month stayed unaffected. The three-year government bond yield closed Thursday at 2.134 percent, down 3.6 percentage points from the previous day.
Housing demand remained strong in the third quarter on the expectation for recovery in the economy.
By Kim In-oh and Cho Jeehyun
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]