South Korean banks' household lending continued to grow at a fast clip in September amid rising demand for mortgage loans, the financial watchdog said Thursday.

Outstanding household loans by local lenders reached 615.1 trillion won ($543.9 billion) as of end last month, up 6.2 trillion won from a month earlier, according to the Financial Supervisory Service.

The September gain was slightly lower than the 7.7 trillion won on-month rise in August. Home-backed mortgages rose 5.9 trillion won on-month to 457.3 trillion won last month.

The FSS said low borrowing costs and strong recovery signs of the local housing market contributed to the rise in such loans.

The total outstanding amount of won-denominated loans stood at 1,321.4 trillion won as of end-July, up 12.7 trillion won from the previous month, with 750.9 trillion won in loans going to the business sector.

The average delinquency rate of bank loans stood at 0.66 percent at the end of September, down 0.1 percentage point from a month earlier.

From a year earlier, the figure fell 0.2 percentage point from 0.86 percent.

Loans with both the principal and interest overdue by one month or more are considered delinquent here.

Over the cited period, lenders wrote off 2.8 trillion won worth of bad debts, with 1.6 trillion won of loans newly turning sour, the FSS said. (Yonhap)