South Korea's financial regulator said Sunday it will invest an additional 20 trillion won (US$18.07 billion) in long-term fixed-rate mortgage loans to meet the explosive demand for a new government-backed lending program meant to tackle the household debt problem.

The move came as South Koreans rushed to sign on with local banks last week to convert their short-term floating-rate mortgage loans into long-term, fixed-rate loans.

The provision of the additional amount will be completed by April 3, with borrowers in the low-income bracket to be given a priority.

Local banks began the conversion on Tuesday, with the first 20 trillion won tranche sold out in just four days.

The Financial Services Commission said the new loans will help household borrowers lower their debt-servicing burden and steadily repay the loans over a long term.

Soaring household debt has been a pain in the neck for local policymakers as it stunts consumer spending and weighs on the national economy that has been slowing in recent years.

According to central bank data, South Korea's household loans totaled 1,089 trillion won as of end-December, with mortgage loans reaching 460.6 trillion won, 42 percent of the total. (Yonhap)