South Korea's financial authorities are considering measures to control household debts mounting from low borrowing costs and eased mortgage lending, threatening to further sap domestic demand, sources said Monday.

Outstanding household loans by local lenders reached 547.4 trillion won (US$488.7 billion) as of end-October, up 6.9 trillion won from the previous month, according to the data compiled by the Bank of Korea (BOK). 

The on-month gain is the sharpest since the central bank began compiling the data in 2008, and also represents a two-fold increase from the previous month when the figure rose 3.7 trillion won, the data showed.

Of the total, mortgage loans accounted for 394.8 trillion won, increasing 6 trillion won from the previous month. They accelerated from 3.5 trillion won growth in September.

"We are very concerned about the pace of household debt growth seen in the past few months," said an official at the Financial Supervisory Service. "If the trend continues, measures will be in place to control the growth pace."

Household debt has been growing as the government has tried to prop up domestic demand and property transactions in a bid to boost growth in Asia's fourth-largest economy. Earlier this year, the finance ministry unveiled a set of measures to support those goals, such as raising the ceiling for mortgage loans. The policy went into effect on Aug. 1.

The central bank lowered the base rate by a quarter percentage point in August and October, pushing its policy rate to a historic low of 2 percent. 

The official said the measures, if taken, would be focused on putting stricter rules on lending rather than adjusting the ceiling for home-backed loans.

"Given unfavorable external conditions, measures would be implemented in a way not to hurt efforts to boost the economy," said the official.

BOK Governor Lee Ju-yeol mentioned earlier that growing household debt may dampen consumption. Speaking to lawmakers in an Oct. 27 parliamentary audit, Lee said there are concerns that household debt may be nearing the critical level that could limit consumption.

The central bank is set to hold its monthly rate-setting meeting Thursday. All 12 analysts surveyed by Yonhap Infomax, the financial news arm of Yonhap News Agency, said the BOK is likely to stand pat while the chances of a rate cut linger in the first quarter, which could further accelerate the rise in household loans. (Yonhap)