Credit to households increased in the second quarter in South Korea

SEOUL, Aug. 27 (Yonhap) — Credit to households in South Korea increased in the second quarter of this year compared to three months ago, although its year-on-year growth has slowed for four consecutive quarters amid strict regulations on the issue, data from the Bank of Korea (BOK) showed. Week loans and their increasing costs.

Loans to households totaled 1,869.4 trillion won (US$1.39 trillion) as of the end of June, an increase of 6.4 trillion won (US$4.772 million), compared to the previous quarter, according to preliminary data from the Bank of Korea. .

Family credit refers to credit purchases and home loans granted by financial institutions.

Of the total, loans to households reached 1,757.9 trillion won (US$1.31 trillion) by the end of June, up 1.6 trillion won (US$1.193 million), compared to the previous quarter. The data showed that purchases on credit also grew 4.8 trillion won (3.579 million US dollars) during the same period to 111.4 trillion won (83.072 million US dollars).

In particular, mortgage loans totaled 1,001.4 trillion won (746,756 million US dollars), an increase of 8.7 trillion won (6.487 million US dollars) from the previous quarter. Other loans, including unsecured loans, fell 7.1 trillion won ($5,294 million) from the quarter to 756.6 trillion won ($564205 million).

Compared to last year, total credit to households grew 3.2 percent, according to the data.

The annual increase has continued to slow since the second quarter of last year, when credit rose 10.5 percent. It also represents a slowdown compared to an increase of 5.4 percent year-on-year during the first quarter of this year.

The slower year-on-year pace of growth is attributed to strict lending regulations, as the South Korean government wants to keep household debt, which has grown rapidly in the face of the pandemic, under control.

Higher market interest rates, in line with the Bank of Korea’s monetary tightening, have also increased the debt burden on many households, raising concerns about its negative impact on consumption and the broader economy.

Last month, the Bank of Korea raised its monetary policy rate (MPR) by 0.5 percentage point, marking the largest and sixth increase since August last year. The central bank is widely expected to raise the monetary policy rate by 0.25 percentage points at its meeting on Thursday.