Household loans rise sharply in March due to seasonal demand

By Park Sae-jin Posted : April 18, 2016, 14:54 Updated : April 18, 2016, 14:54

Labor Party workers stage a street performance to highlight household debt.[Yonhap Photo]


South Korea's household debt extended by banks rose sharply in March due largely to seasonal demand for mortgage loans, central bank data showed Monday.

At the end of March, outstanding household loans extended by lenders stood at 649 trillion won (564 billion US dollars), up 4.9 trillion won from a month ago, according to the Bank of Korea, compared to a monthly increase of 2.1 trillion won in January and 2.9 trillion won in February.

In March, mortgage loans were up 4.4 trillion won on-month to 486.9 trillion won, the bank said.

Financial regulators have predicted a slight slowing in household debt growth in 2016 thanks to tightened regulations and a rise in borrowing costs.

After South Korea's total household debt reached a record high of 1,207 trillion won at the end of last year, banks have tightened lending guidelines to strictly check borrowers' repayment abilities based on their income and grant shorter loan periods.

Many households have taken out loans to cover rising housing costs and living expenses while their income has stagnated amid a prolonged economic slump.

 Some economists have warned that a rise in interest rates will lead to massive household default, but the central bank sees little chance that South Korea will see massive mortgage default anytime soon.

Aju News Lim Chang-won = cwlim34@ajunews.com
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