SEOUL, Aug. 19 (Yonhap) — South Korea’s household credit grew at a faster pace in the second quarter compared to three months earlier amid a sustained rise in banks’ home-backed loans, central bank data showed Wednesday.
Household credit reached a record high of 1,637.3 trillion won (US$1.38 trillion) as of June, up 25.9 trillion won from three months earlier, according to data from the Bank of Korea (BOK).
Household credit refers to credit purchases and loans for households that have been extended by financial institutions, including commercial lenders and mutual savings banks.
The second-quarter tally compared with an 11.1 trillion won on-quarter rise in the first quarter. In the January-March period, household credit grew at the slowest pace in one year amid the virus outbreak.
Household lending extended by banks and other financial institutions reached 1,545.7 trillion won in the April-June period, up 23.9 trillion won from three months earlier.
It marked the largest quarterly gain since the fourth quarter of 2017, when household loans grew by 28.7 trillion won.
The growth of home-backed lending extended by the financial sector slowed from three months earlier, but banks reported a sustained increase in mortgage loans amid rising housing prices, the BOK said.
Mortgage loans rose 14.8 trillion won on-quarter to 873 trillion won in the second quarter, slowing from a 15.3 trillion won increase in the first quarter. But the reading almost doubled from an 8.4 trillion won on-quarter gain the same period of last year.
Local banks’ home lending grew 14.4 trillion won on-quarter to 795 trillion won in the second quarter, compared with a 12.9 trillion won increase three months ago.
In the second quarter, loan demand to buy stocks also rose in line with the country’s bull stock market. Despite the virus outbreak, Seoul’s stock market gained ground amid ample liquidity sparked by a long-streak of low rates.
Credit purchases stood at 91.6 trillion won as of end-June, up 2 trillion won from three months earlier, the BOK said. In the first quarter, credit purchase declined 6.1 trillion won.
Korea’s household debt has been repeatedly cited as the main drag on Asia’s fourth-largest economy, as households’ high indebtedness is feared to curb domestic demand and thus crimp economic growth.