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S. Koreans’ demand for personal credit loans surge 2.3% in July

Korean lenders’ personal credit loans extended to borrowers gained 2.3 percent on-month in July, following the largest-ever increase in June, data showed Tuesday, fueling concerns on the nation’s heated housing market and the dire job market amid the coronavirus pandemic.

Outstanding personal loans extended to individual borrowers by five major lenders here rose a combined 2.28 percent, or 2.7 trillion won ($2.26 billion), from the previous month to 120.2 trillion won last month, industry data showed. The five lenders refer to KB Kookmin, Shinhan, Hana, Woori and NH Nonghyup.

The latest gain has sparked concerns among onlookers, as the figure had just seen its largest-ever on-month rise of 2.8 trillion won in June. It gained 2.2 trillion won in March, double the amount it had gained in February, when the pandemic gained a stronger grip on the nation’s economy.

Since June, experts have cited panicked investors that have been witnessing the spike in housing prices behind the demand for unsecured loans, despite the government’s controversial policy actions aimed at steadying the bubble-probe real estate market.

The measures focus on levying heavier property taxes for multiple-home owners, hoping they would unload some properties, alongside adopting stricter loan restrictions.

Mortgages extended by the banks increased by a combined 1.4 trillion won to an outstanding 452.8 trillion won in July. It had surged by some 4 trillion won in both March and April and 1.8 trillion won in May.

“With the surge in housing prices, even nonhomeowners have been eyeing property purchase, but with the stricter loan restrictions, many have been seeking to buy with personal credit loans,” said Sung Tae-yoon, a professor of economics at Yonsei University.

By Jung Min-kyung (