Chief regulator vows to keep vigilant over household debts

South Korea's top financial overseer pledged on Friday to maintain a watchful eye over household borrowing, despite a recent slowdown in loan growth under stricter rules. Chairman Lee Eog-weon of the Financial Services Commission (FSC) noted that while curbing loans for speculative purposes was necessary, it was equally important to channel funds towards home construction and those with genuine housing needs.

In July, household loans issued by all financial institutions increased by 6.2 trillion won ($4.38 billion) compared to the previous month's 8.3 trillion-won rise, according to FSC data. Growth in home-backed loans also decelerated to 3.5 trillion won from 4.5 trillion won over the same period.

Lee highlighted that a recently unveiled comprehensive financial package aimed at boosting housing supply and offering financial aid to young people and those with real home demand. On Thursday, the regulator announced plans to expand policy loans for construction projects to approximately 50 trillion won, up from the previous 26 trillion won, and provide additional loans to young people and newlyweds seeking to purchase homes, in an effort to stabilize the housing market.