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SEOUL, May 11 (Yonhap) – Household loans granted by banks in South Korea rose in April for the first time in five months, despite the government’s restraint on lending and rising borrowing costs, central bank data showed on Wednesday.
Banks’ outstanding household loans stood at 1,060.2 trillion won ($829.8 billion) by the end of April, up 1.2 trillion won from the previous month, according to Bank of Korea (BOK) data.
This was the first month-on-month increase since December. It was also compared to a 1 trillion won drop in March.
Outstanding household loans to the entire financial sector, including non-banks, rose 1.3 trillion won in April from the previous month, according to data from the Financial Services Commission and the Financial Supervisory Service.
The rise in April came despite the government’s restraint on lending amid concerns about spiraling household debt and rising borrowing costs due to the central bank’s move to raise interest rates to curb mounting inflationary pressures.
Last month, the BOK raised its key interest rate by a quarter of a percentage point to 1.5 percent, the fourth rate hike since August last year. It pointed to further increases in the coming months.
“Banks are stepping up their promotional efforts (to attract customers) by tightening spreads and raising lending limits, which appears to be causing lending that has been frozen since December to slowly change,” a BOK official said.
Observers expect Yoon Suk-yeol’s new government, which took office on Tuesday, to push for easing the current tight limit on lending amid signs that household debt has been managed stably in recent months .
The BOK said April’s rise in household credit was the slowest pace of growth on record this month. The previous record was an increase of 1.5 trillion won registered in April 2010.
Of the total, banks’ mortgage loans to households rose 2.1 trillion won month-on-month to 786.8 trillion won in April, while their other lending, mainly unsecured loans, shrank 900 billion won to 272.1 trillion won, like the data showed.
Meanwhile, banks’ corporate loans grew for the fourth straight month in April due to seasonal reasons such as the need to pay the sales tax due in the month.
Their corporate loans stood at 1,106 trillion won at the end of April, up 12.1 trillion won from the previous month, the data showed. The month-on-month growth was faster than the previous month’s increase of 8.6 trillion won.