Household loans extended by local banks rose at a fast clip in February, quickening from a month earlier amid continued demand for home-backed loans, central bank data showed Wednesday.
Outstanding household loans extended by local banks came to 644.2 trillion won ($530.77 billion) as of end-February, up 3 trillion won from the previous month, according to the data from the Bank of Korea (BOK).
Apartment complex in Seoul (Yonhap)
The 3 trillion-won gain far outpaces an average 0.9 trillion won on-month increase for February in the 2010-2014 period. It also marks an acceleration from a 2.1 trillion-won increase in January.
"Household lending by banks continued to rise at a pace that exceeds the average rate for previous years, rising 3 trillion won in February," the BOK said in a press release.
The banks freshly added 2.7 trillion won to their home-backed loans in February alone.
Credit loans gained 300 billion won from the previous month to 160.9 trillion won, marking a turnaround from a 600 billion-won on-month drop in January.
Household debt is fast becoming a headache for the government and the central bank, which could quickly cause a financial crisis should interest rates begin trending higher.The BOK earlier said the country's household credit, which represents total borrowing by households, reached a fresh high of 1,207 trillion won as of end-December, also breaching the 1,200 trillion-won mark for the first time in the country's history.
The central bank has kept its key policy rate frozen at a record low level of 1.5 percent for eight consecutive months since last June, despite lingering calls for an additional rate cut to bolster growth in Asia's fourth-largest economy.
Unlike households, local firms continued to cut down on their borrowing.As of end-February, outstanding corporate loans extended by local banks came to 733.4 trillion won, up 2.4 trillion won from a month earlier and marking a slowdown from a 6.9 trillion-won on-month gain in the previous month. (Yonhap)