South Korea’s household debt hit a record high in May, although its monthly growth rate has slowed considerably due to a sharp drop in household bank loans, the central bank reported Tuesday.

According to Bank of Korea data, the nation’s total household debt rose to 768.2 trillion won ($679.2 billion) as of the end of May, up 2.9 trillion won. The figure increased for 16 consecutive months since January of last year, when the amount decreased by 2 trillion won.

Of the 2.9 trillion won rise in borrowing, house-backed mortgage loans made up 500 billion won, or 17.2 percent. The growth marked a sharp fall from April, when housing-backed mortgage loans took up 8 trillion won, or 79 percent of the 10.1 trillion won monthly debt increment.

The BOK attributed the slowing growth of household debt to the loan transfer program led by the Financial Services Commission, offered in two batches from late March through early April. The financial regulator pushed the loan transfer to slow down snowballing household debt, encouraging households to transfer debt from the amortized, floating-rate loans to fixed-rate loans that require a monthly principal repayment.

By lending group, the household loans extended by first-tier banks fell to 1.6 trillion won in May from April’s 8.7 trillion won. During the same period, the loans extended by second-tier lenders fell to 1.3 trillion won from 1.4 trillion won.

By Chung Joo-won (joowonc@heraldcorp.com)