Household loans extended by South Korean financial institutions continued to grow in January but the expansion decelerated from the previous month due mainly to seasonal factors, central bank data showed Tuesday.
Outstanding household lending by local lenders and non-banking institutions reached 746.5 trillion won (US$668.7 billion) in January, gaining 671 billion won from a month earlier, according to the Bank of Korea (BOK).
The on-month increase marks a sharp slowdown from a near-record 7.7 trillion won on-month rise in December but is growth from the previous year when the figure shrank by 2 trillion won.
"Household loans tend to decline in January, partly due to end-year bonuses received from companies. This year, the amount still increased on the back of low borrowing costs," explained a BOK official.
By sector, banks' household loans increased by 417 billion won in January from a month earlier to 520.1 trillion won while those by non-banking institutions gained 253 billion won.
Of the total, mortgage loans extended by all financial institutions increased 1.4 trillion won to 462 trillion won, sharply slowing from the previous month's 5.2-trillion won gain.
The latest data comes two days ahead of the central bank's policy decision. In a survey by Yonhap Infomax, the financial news arm of Yonhap News Agency, 14 out of 18 analysts forecast the BOK to stand pat on the record 2-percent rate as household debt continues to grow at an alarming pace.
"The 2-percent policy rate is generating massive credit.
Theoretically, there is little need for an additional rate cut," said Lhee Jung-bum, an analyst at Korea Investment & Securities.
Household credit in South Korea, which includes household debt, soared to a record 1,089 trillion won as of end-December, pushing the government to step up measures to rein in growth.
Media reports said the government plans to launch a consultative committee, consisting of officials from the finance ministry, the central bank and the financial regulator, to work as a key cooperation channel for its efforts to cope with household debt. (Yonhap)
