Household loan growth picks up in Aug.

SEOUL, Sept. 9 (Yonhap) -- The growth of household lending by South Korean banks
accelerated in August as mortgage loans continued to increase despite stiffened
restrictions, the central bank said Wednesday.

As of the end of August, outstanding bank household lending amounted to 405.1
trillion won (US$330.5 billion), up 3 trillion won from a month earlier, the Bank
of Korea (BOK) said. This compared with a 2.6 trillion won increase in July, it
added.
"Despite toughened rules on home-backed loans, mortgage lending maintained its
upward trend amid expectations for an additional rise in housing prices," the
central bank said.
Home loans expanded by 2.8 trillion won on-month to 260.5 trillion won. They grew
by 3.5 trillion won in June, the fastest growth in more than two years, as
all-time record low borrowing costs raised demand amid rising housing prices.
South Korea's financial regulator in early July toughened regulations on bank
mortgage lending by allowing lenders to extend loans amounting to up to just 50
percent of the value of a residence in the greater Seoul areaa, down from 60
percent. Last week, the watchdog decided to impose more limits on mortgage
lending.
Due to higher risks stemming from loans to smaller firms, Korean banks have been
scurrying to expand their mortgage lending this year, stoking worries about a
surge in housing prices.
The BOK cut its key interest rate by a total of 3.25 percentage points to a
record low of 2 percent between October and February in a bid to help bolster the
slumping economy. But all-time low borrowing costs contributed to rising
household demand for home-backed lending.
Meanwhile, banks' corporate loans reached 511.1 trillion won as of the end of
August, up 3.6 trillion won from the previous month as lending to smaller
companies shot up, the BOK added.
The data comes a day before the BOK makes its monthly interest-rate decision. The
central bank is widely forecast to freeze the benchmark seven-day repo rate for
the seventh straight month.
sooyeon@yna.co.kr
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