S.Korea's household debt growth accelerates in July on lower borrowing cost

Source: Xinhua| 2019-08-13 13:44:50|Editor: mingmei
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SEOUL, Aug. 13 (Xinhua) -- Household debt growth in South Korea accelerated last month on lower borrowing cost, joint data from the central bank and the financial regulators showed Tuesday.

Debts owed by households to financial institutions expanded by 6.2 trillion won (5.1 billion U.S. dollars) in July, up from an increase of 6.8 trillion won (5.6 billion U.S. dollars) a year earlier, according to joint data from the Bank of Korea (BOK), the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS).

It came as the BOK lowered its interest rate by 25 basis points to 1.50 percent last month. The lower borrowing cost encouraged households to purchase new home with borrowed money.

Mortgage loans extended by banks to households grew 3.6 trillion won (3 billion U.S. dollars) last month, and credit loans increased 2.2 trillion won (1.8 billion U.S. dollars), marking the biggest growth since October last year.

The rapid growth in credit loan was attributed to households, which borrowed credit loan, rather than home-backed loan, to purchase new home.

The government unveiled measures to tighten standard for mortgage loan in a bid to control speculative investment in the real estate market.

Mortgage loans extended by nonmonetary institutions declined 1.4 trillion won (1.1 billion U.S. dollars) in July due to the government's mortgage-controlling measures.

For the first seven months of this year, the household debts by financial institutions went up 24.2 trillion won (19.8 billion U.S. dollars) compared with the same period of last year.

The cumulative increase in household debts continued to fall from 49.6 trillion won (40.7 billion U.S. dollars) in the January-July period of 2017 to 39.2 trillion won (32.2 billion U.S. dollars) in the seven-month period of 2018.