Household debt jumps 11% from year ago

South Korea's household debt jumped 11 percent in the first quarter despite stricter lending rules at banks, its central bank said Thursday.

The country's overall household debt climbed to 1,223.7 trillion won ($1.035 trillion) in the January-March period from 1,098.3 trillion won a year earlier, the Bank of Korea said in a statement.

Quarter-on-quarter, household debt, which includes credit-card spending, rose 1.7 percent, it said. 

"As banks have adopted a stricter evaluation system before extending loans, lower-credit customers turned to insurers, consumer financing firms and other nonbanking institutions in the first quarter," a BOK official said.

As those nonbanking lenders charge far higher rates for their loans to customers compared with banks, some nonbanking sector loans could turn into nonperforming loans in case of rate hikes.

Lower rates have sharply driven up the country's household loans in recent years. The country's key policy rate stands at an all-time low of 1.5 percent.

Against this backdrop, the government introduced stricter lending rules for loans, such as home-backed lending from February, as part of its pre-emptive efforts to prevent a crisis that could arise from snowballing bad debts at financial institutions. (Yonhap)