Banks' household loans grow at slower pace in November amid tight lending rules

South Korean banks' loans to households grew at a slower pace in November amid the government's stepped-up control on home-backed loans and other lending, central bank data showed Wednesday.

According to the data from the Bank of Korea, banks' household loans stood at 1,060.9 trillion won ($901.2 billion) as of end-November, up 3 trillion won from a month earlier.

The on-month growth decelerated from a 5.2 trillion won growth in October.

Of household loans, mortgage loans grew 2.4 trillion won on-month in November to 776.9 trillion won, which also slowed from a 4.7 trillion won increase a month earlier, the data showed.

Other types of loans, including unsecured credit-based loans grew 500 billion won on-month to 282.9 trillion won. The increase was the same as a rise recorded a month earlier.

South Korea has been tightening its control on household debt growth amid worries that soaring household borrowing could weigh on economic recovery.

The central bank's move to raise its key policy rate and the consequent increasing borrowing costs at banks have also weighed on those seeking to take out loans.

In November, the BOK raised its policy rate by a quarter percentage point to 1 percent, ending 20 months of the zero range rate put in place to prop up the pandemic-hit economy. It marked the second rate hike since a 0.25 percentage point rise in August.

Meanwhile, banks' loans to businesses also grew at a slower pace in November but growth trends still remained strong due to high demand for funds from small companies to tide over the fallout from the pandemic.

The data showed that banks' outstanding business loans stood at 1,068.4 trillion won at the end of November, up 9.1 trillion won from a month earlier. The on-month growth was slightly smaller than a rise of 10.3 trillion won in October. (Yonhap)