As of end-April, outstanding household loans by Korea’s five major banks -- KB Kookmin Bank, Shinhan Bank, KEB Hana Bank, Woori Bank and NH NongHyup Bank -- came to 579.5 trillion won ($494.8 billion), up 3.38 trillion won from the previous month, the banks said.
This increase marks the highest hike in banks’ household lending since December, which saw an increase of 4.16 trillion won on-month, amid government regulatory efforts to curb household loans.
Household borrowing activities began to slow down since late last year, in part due to the Bank of Korea’s decision in November to raise its benchmark interest rate by 0.25 percentage point to 1.75 percent. The move led local lenders to follow through with loan rate hikes of their own.
Korea’s economy contracted 0.3 percentage quarter-on-quarter in the first three months of this year, in the biggest contraction since the 2008 global financial crisis, the central bank said last week.
Household lending includes three types of loans -- mortgage-backed loans, credit-based personal loans and group loans. Of them, mortgage loans take up the biggest portion.
As of end-April, local banks’ mortgage-backed lending came to 415.7 trillion won, up by 3.13 trillion from the previous month. Credit lending came to 100.7 trillion won last month, up by 401 billion won on-month. Group loans came to 134.77 trillion won, up by 1.9 trillion won on-month.
Total debt owed by Korean households grew 5.8 percent on-year in 2018 to a record 1,534.6 trillion won.
By Sohn Ji-young (firstname.lastname@example.org)