Banks' household loan growth slows for 2nd straight month

Household loan growth by banks decelerated for the second consecutive month, according to central bank figures released on Wednesday. The Bank of Korea reported that total household loans reached 1,198 trillion won ($893 billion) in the previous month, a modest 3.4 trillion won increase from the prior month. This marked the smallest monthly rise since April, when the figure expanded by 2.1 trillion won.

Mortgage lending, however, showed signs of acceleration, with outstanding mortgage loans increasing by 4 trillion won on a month-over-month basis to 952.5 trillion won. In contrast, other types of household loans declined by 600 billion won to 244.9 trillion won. The uptick in housing transactions in the Seoul metropolitan area earlier this year, coupled with homes becoming available for occupancy in July and August, drove demand for mortgage loans, an official from the central bank explained.

Despite the slowdown in household lending growth, mortgage loans have been on a gradual rise. The official cautioned, though, that the impact of recent real estate policies announced in August remains to be seen.