S. Korea Posts Rise in September Household Debt
(MENAFN) Household borrowing from South Korean banks continued its upward trend for the eighth consecutive month in September, driven by steady demand for home loans, according to data released Thursday by the Bank of Korea (BOK).
Total household debt held by deposit-taking banks reached 1,170.2 trillion won ($824.9 billion) at the end of September, marking a 2.0 trillion won ($1.4 billion) increase from August. While the pace of growth slowed compared to the 4.1 trillion won ($2.9 billion) jump in the previous month, household debt has consistently climbed since February, bolstered by sustained appetite for mortgage financing.
In September alone, mortgage lending by banks expanded by 2.5 trillion won ($1.8 billion). In contrast, non-mortgage borrowing — which includes credit loans, overdraft accounts, and loans secured by commercial real estate — fell by 500 billion won ($352.5 million).
Despite the continued rise in debt, signs of weakness emerged in the property market. Nationwide apartment transactions declined sharply, falling from 54,000 in June to 35,000 in July, and slipping further to 34,000 in August.
The BOK has responded to economic pressures by easing monetary policy, cutting its key interest rate by 25 basis points in both February and May. These followed similar reductions in October and November of the previous year, bringing the benchmark rate to 2.50 percent.
Corporate lending also climbed last month, with outstanding loans to businesses hitting 1,360.1 trillion won ($958.8 billion), an increase of 5.3 trillion won ($3.7 billion) from August. Lending to large enterprises rose by 1.3 trillion won ($916.5 million), while small and mid-sized firms saw a collective increase of 4.0 trillion won ($2.8 billion).
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