Household debt rises in August amid low interest rates

South Korea's household debts rose in August despite the government's efforts to tackle the potential risk factor for Asia's fourth-largest economy, central bank data showed Thursday.

The balance of household loans extended by local banks amounted to 682.4 trillion won ($623 billion) as of the end of August, up 8.7 trillion won from a month earlier, according to the Bank of Korea.

Of the aggregate debts, mortgage loans extended by banks rose by 6.2 trillion won to 512.7 trillion won.

Last month, the government said it will cut the supply of new apartments to curb demand for fresh mortgage loans.

The country's total household credit jumped 11.1 percent on-year to an all-time high of 1,257.3 trillion won as of end-June amid prolonged low interest rates and strong demand for new apartments.

It's one of the highest household debt levels in the world compared with income and viewed as a potential "time bomb" for the economy.

The BOK slashed the key rate to a record low of 1.25 percent in June in a bid to help revitalize the economy. Analysts said they expect the BOK to hold the key rate steady at a record low 1.25 percent for September. (Yonhap)