Banks' home-backed loans grow at slower pace in Aug.

SEOUL, Oct. 20 (Yonhap) -- Home-backed loans by South Korean banks grew at a
slower pace in August after financial authorities toughened lending regulations
to stem rising home prices, the central bank said Tuesday.
Local banks' mortgage lending to households expanded by 2.8 trillion won (US$2.4
billion) in August, slowing after sharp growth in the previous two months,
according to the Bank of Korea (BOK).
In July, mortgage lending climbed by 3.4 trillion won after growing 3.5 trillion
won in June, the fastest growth in more than two years.
"Home-backed loan growth slowed (in August) as the government's tightening of
loan-to-value (LTV) regulations shrank borrowing," the central bank said in a
statement.
In early July, the financial regulator banned borrowers from taking loans that
amount more than 50 percent of their home value, reducing the ceiling from 60
percent. The measure was aimed at stemming soaring home prices as ample liquidity
fed into home price growth on the back of the central bank's expansionary
monetary policy.
Home-backed lending by non-banking financial institutions, however, continued to
grow sharply in August as only banks mortgage lending falls subject to the new
rule tightening, according to the BOK.
Mortgage lending by non-banking lenders grew by 955 billion won in August,
compared with an expansion of 981 billion won, the central bank said.
The total household lending by local banks and non-banking lenders expanded by
4.7 trillion won in August, compared with 4.4 trillion won the previous month,
the central bank said.
As of end-August, outstanding household loans reached 537.5 trillion won, up 6.8
percent from July, it added.
The BOK froze its key interest rate at a record-low of 2 percent for the eight
straight month in October after cutting it by a total of 3.25 percentage points
between October and February.
pbr@yna.co.kr
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