SEOUL: Household debts in South Korea, one of major risks factors facing the economy, kept rising at a fast pace last month on the back of a record-low interest rate, central bank data showed Wednesday.
Outstanding household debts by banks amounted to 673.7 trillion won (616 billion U.S. dollars) as of the end of July, up 6.3 trillion won from a month earlier, according to the Bank of Korea (BOK). It was down from a 6.5 trillion-won expansion in June, but it more than tripled a monthly average growth of 2 trillion won tallied in July between 2010 and 2014. Mortgage loans by banks stood at 506.6 trillion won as of end-July, up 5.8 trillion won from a month ago. It marked the largest monthly growth in 2016.
The fast increase came as the BOK lowered the benchmark interest rate by 25 basis points in June to an all-time low of 1.25 percent. The number of apartment transactions in the capital Seoul was 14,000 in July, up 2,000 from the previous month. The record-low policy rate pulled down lending rates for home-backed loans.
Corporate loans by banks increased 6.1 trillion won in July from a month earlier, turning around from a 1.2 trillion-won reduction. Loans to small companies jumped 5.5 trillion won last month, with those to big corporations rising by 0.5 trillion won.
