Household loans extended by South Korean financial institutions continued to grow at a fact clip in July, central bank data showed Wednesday, adding to growing concerns over the country's bulky household debt.

Outstanding household lending by local lenders and non-banking institutions totaled 763.3 trillion won ($639.1 billion) as of the end of July, up 3.3 trillion won from the previous month, according to the data by the Bank of Korea.

The July reading excludes the 6.2 trillion won that was transferred to the state housing agency under the government's household debt policy.

Most of the July gain resulted from loans extended by non-banking institutions. Those by non-banking institutions rose 2.2 trillion won on-month, while those by banks added 1.1 trillion won.

The central bank attributed the increase in household loans to low interest rates and strong home transactions.

In Seoul alone, apartment transactions reached 12,100 in July, nearly three times the July average from 2006 to 2014, with bank mortgage loan rates averaging 2.96 percent.

The July household debt tally comes after household credit totaled a fresh record of 1,130.5 trillion won as of end-June, up 32.2 trillion won from a revised 1,098.3 trillion three months earlier.

Household credit refers to credit purchases and loans extended by financial institutions, including commercial lenders and mutual savings banks.

Growing household debt has been Seoul's policy bugbear as demand for loans increased following the central bank's four rate cuts that sent the key interest rate to a record low of 1.5 percent.

In an interview with Yonhap News Agency on Wednesday, the head of South Korea's financial watchdog said it will keep close tabs on the country's fast-growing household debt to prevent any fallout from China's financial turmoil and a possible U.S. interest rate hike from aggravating the matter.

Economists say that the issue is also a stumbling block that will likely deter the BOK from delivering an additional rate cut.

The government also announced measures to ease household debt risks by encouraging fixed-rate and long-term loans over floating-rate and short-term loans.

The central bank is set to hold its monthly rate-setting meeting on Friday. A majority of 13 out of 15 analysts polled by Yonhap Infomax, the financial news arm of Yonhap News Agency, projected a rate freeze for this month. (Yonhap)