Bank loans to households increase for the third month in June thanks to secured home loans

SEOUL, July 12 (Yonhap) — Household lending by banks in South Korea rose for the third straight month in June, as home-secured lending picked up mainly due to demand for home rental loans, it said. central bank data on Tuesday.

Outstanding household loans from banks stood at 1,060.8 trillion won ($808.3 billion) at the end of June, up 300 billion won from the previous month, data showed. the Bank of Korea (BOK).

It was the third consecutive month of increases, but the amount rose at a slower pace than in May, when the corresponding figure rose by 400 billion won.

The BOK said banks’ household lending increased last month as demand for housing-related loans increased despite rising borrowing costs.

Loans guaranteed by banks rose by 1.4 trillion won in one month to reach 789.1 trillion won at the end of June. June’s rise accelerated after a monthly increase of 800 billion won in May.

Unsecured loans and other non-mortgage loans from banks, however, fell by 1.2 trillion won to 270.4 trillion won last month, mainly due to higher lending rates.

Borrowing costs rose as the BOK raised the policy rate in an effort to control inflation and reduce household debt.

In May, the BOK raised the rate by a quarter of a percentage point to 1.75%, the fifth increase since August last year. The central bank will hold its rate-setting meeting on Wednesday, with market participants eyeing the possibility of an unprecedented “big step” of 50 basis points.

Loans to households from banks and nonbanks rose 700 billion won month on month in June, according to separate data from the financial regulator.

Meanwhile, business lending from banks rose for the sixth straight month in June as lenders launched loan programs to help businesses cope with a shortage of funds amid the pandemic.

Their corporate loans stood at 1,125.2 trillion won at the end of June, up 6 trillion won from the previous month, according to BOK data. It was the largest increase for any month in June since 2009, when the central bank began compiling related data.

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