Home-backed lending jumps W2.4tr in April

Korean banks’ home-backed loans grew by the largest amount in four months in April as the economic recovery spurred loan demand, the central bank said Thursday.

Local banks’ mortgage loans reached an outstanding 292.3 trillion won ($269 billion) as of the end of April, up 2.4 trillion won from the previous month, according to the Bank of Korea.

The April number jumped from a 2.1 trillion won on-month gain tallied in March and marked the sharpest monthly expansion since 2.7 trillion won growth in December 2010, the BOK said.

“The growth of bank mortgage lending picked up as loans applied for ahead of the implementation of the re-tightened rules on mortgage lending were extended to borrowers in April,” said Kim Hyun-kee, a senior economist at the BOK.

In March, the government re-tightened eased rules on mortgage lending in a bid to curb excessive growth of household debt. In August 2010, the government temporarily eased its grips on home-backed loans to bolster the tepid housing market.

Banks’ home-backed lending increased for the eighth straight month last month amid continued economic growth and softened rules on mortgage loans.

Meanwhile, South Korean banks’ corporate lending grew at the fastest pace in almost 3 years in April, mainly because large firms’ demand for short-term operating funds increased, the BOK added.

Corporate loans by local banks reached an outstanding 538.7 trillion won as of end-April, up 9 trillion won from the previous month. It marked the fastest expansion since a 9.6 trillion won on-month expansion seen in July 2008.

Bank lending to large firms jumped by the most last month since the BOK began to compile related data, it added. Such lending increased by 6.5 trillion won on-month to 98.8 trillion won.

In April, bank deposits soared by 11.6 trillion won on-month to 1,061 trillion won as demand for time deposits was on an upward trend.

The data came one day before the BOK holds its monthly rate-review meeting amid high inflationary pressure.

Analysts said the BOK is likely to raise the key interest rate by a quarter percentage point to 3.25 percent, following the rate freeze in March.

The bank has raised the borrowing cost by a combined 1 percentage point four times since July last year in an effort to normalize the accommodative stance. 

(Yonhap News)