Growth in South Korean banks' household lending gathered pace in August from the previous month on robust property trade and a seasonal increase in demand for holiday spending, central bank data showed Thursday.

Outstanding household loans extended by local lenders totaled 609.6 trillion won ($508.8 billion) as of the end of last month, increasing 7.8 trillion won from July, according to the Bank of Korea.

The monthly gain is slightly bigger than a 7.3 trillion won gain in July but still smaller than an 8.1 trillion won increase in June.

The BOK said that low lending rates and robust home transactions prompted the continued rise in household loans.

Demand for household loans has been on the rise in line with the central bank's four rate cuts delivered over the past year, which sent the key interest rate to a record low of 1.5 percent.

Potential home buyers rushed to bank on the low rate, pushing up the number of Seoul apartment transactions to 10,600 last month, more than double the average of 4,800 for the month of August between 2006 and 2014.

Of the total, home-backed loans accounted for 6.1 trillion won, slightly slowing from 6.4 trillion won growth in July.

The country's sizable household debt is deemed a major policy bugbear, with related risks feared to further rise when the U.S. Federal Reserve delivers its first rate hike in nearly a decade.

In efforts to ease such risks, the financial watchdog in July unveiled a comprehensive package, which centers on inducing fixed-rate and long-term loans and tightening the screening of borrowers' repayment abilities.

Separately released data showed that South Korea's M2 money supply continued to expand in July from the previous month.

The M2 expanded 9.3 percent on-year to 2,198 trillion won in July, quickening from a 9 percent rise in the previous month.

M2 includes currency in circulation as well as types of deposits with a maturity of less than two years at lenders and non-banking financial institutions. It does not cover those with a maturity of two years or longer, government bonds or corporate bonds.

The central bank estimated the M2 has increased in the mid-9 percent range from a year earlier in August. (Yonhap)