Household loans extended by banks in South Korea rose for a fifth straight month in August, led by a record increase in mortgages, central bank data showed Wednesday.

Banks’ outstanding household loans came to 1,130 trillion won (US$844.2 billion) as of end-August, up 9.3 trillion won from a month earlier, according to the data from the Bank of Korea (BOK).

The reading marks a sharp acceleration from a 5.5 trillion-won gain in July and the highest on-month increase in 37 months.

Banks’ home-backed loans added 8.2 trillion won from a month earlier to 890.6 trillion won in August, marking the highest on-month increase in the country’s history.

Policymakers have blamed a recent rise in home prices, especially in the Seoul metropolitan area, for the sharp increase in mortgages.

Borrowing costs in the country have remained high since February 2023, when the central bank delivered its latest interest rate hike. The BOK has since stood pat on its key rate.

In August, unsecured or other types of loans extended
by banks added 1.1 trillion won to 238.4 trillion won, marking the steepest on-month increase since July 2021.

Corporate loans extended by banks gained 7.2 trillion won from a month earlier to 1,311.9 trillion won in August, compared with a 7.8 trillion won on-month increase the previous month, the data showed.

Meanwhile, household loans extended by all financial institutions, including savings banks and insurance firms, gained 9.8 trillion won last month, according to data from the Financial Services Commission.

Home-backed loans rose 8.5 trillion won, with those extended by banks taking the lion’s share.

Unsecured and other types of loans gained 1.3 trillion won as those extended by banks rose 1.1 trillion won, compared with a 100 billion won on-month drop in July, while those extended by secondary banks also turned around from a 100 billion won decline to a 200 billion won increase, the financial regulator said.

Source: Yonhap News Agency