Commercial banks saw their outstanding loans extended to the household sector snowball about 1 trillion won ($909 million) in April from a month earlier, data from the Financial Supervisory Service showed Sunday.

After falling 3.4 trillion won in January and 1.5 trillion won in February, the combined lending balance in the banking sector started to climb again from March, when the loans increased by 100 billion won on a monthly basis.

In April, the banks’ outstanding loans came to 460.6 trillion won, taking up about half of the nation’s total household debt, which has emerged as a social woe.

FSS officials said credit-based loans accounted for most of the 1 trillion won increase.

Korea saw household debt reach an all-time high of more than 950 trillion won, which could possibly be linked to massive increase of credit delinquents.

Some global credit rating firms such as Moody’s Investors Service have warned that household debt defaults could potentially create shocks in the financial market, equivalent to Korea’s 2003 credit card fiasco and the 2008 global financial crisis.

According to a report form the Korea Center for International Finance, the banking sector had gradually been recovering profitability and quality of assets since the global financial crisis. But it stressed that “the growth in household debt could serve as a risk factor.”

The institution pointed to households’ growing burden from higher interest rates on mortgages.

It also said about 30 to 40 percent of mortgages were taken out for the purpose of investment or consumption rather than actual house purchases.

Though their outstanding housing-collateralized loans fell by 100 billion won in April, the figure was calculated after omitting the soured mortgage loans worth 3.3 trillion won, transferred to others including non-bank financial firms, said FSS officials.

By Kim Yon-se (kys@heraldcorp.com)