Household loans extended by banks surged last year on the back of low borrowing costs and eased mortgage lending regulations, spurring concerns that such snowballing debt could hold back Asia's fourth-largest economy, the central bank said on Monday.
Household loans by banks increased 37.3 trillion won ($33.6 billion) last year with home-backed loans spiking 35.4 trillion won last year, according to the report by the Bank of Korea submitted to the National Assembly.
Household debt has been growing sharply as the government tried to prop up domestic demand and property transactions to push growth.
In July, the finance ministry unveiled a set of measures to support those goals, such as raising the ceiling for mortgage loans. The policy went into effect on Aug. 1.
The BOK also chimed in by lowering its policy rate by a quarter percentage point each in August and October, pushing the rate to a historic low of 2 percent.
BOK Gov. Lee Ju-yeol has been expressing concerns over rising levels of debts held by households.
"Household loan growth eased in January compared with a month earlier, but its upward momentum is still on-going," said the central bank.
The central bank said it has been operating a task force since November to monitor the trend of household loans and is working on setting up a new database to assess the exact picture of such loans.
But the BOK said the ratio of such loans souring stood was low at 0.6 percent and 0.7 percent each in the third and fourth quarter of last year. (Yonhap)
