Financial firms' home loans grow by record amount in 2009

SEOUL, Jan. 6 (Yonhap) -- South Korean financial firms' home-backed loans rose by
the largest amount on record in 2009 as record low borrowing costs boosted loan
demand, data by the financial watchdog showed Wednesday.

Mortgage loans extended by local banks and nonbank institutions reached 351.2
trillion won (US$308.1 billion) as of the end of December, up 43.4 trillion won
from the previous year, according to data compiled by the Financial Supervisory
Service. The 2009 reading marked the largest full-year gain in history, it added.
Local banks' home-backed lending amounted to 265.1 trillion won as of
end-December, up 35 trillion won from a year earlier. The 2009 increase compared
with a 29.8 trillion won expansion seen in 2006 when lenders were scurrying to
extend home-backed loans.
The data comes as the Bank of Korea (BOK) cut its key interest rate by a total of
3.25 percentage points to a record low 2 percent between October 2008 and
February in an effort to put the brakes on a sharp economic freefall.
Amid record-low borrowing costs and signs of an economic recovery, demand for
mortgage lending rose in expectation of further gains in housing prices last
year.
On the basis of the quarterly growth, home-backed loans jumped by 13.3 trillion
won in the third quarter after rising by 8.3 trillion won and 12 trillion won in
the first and second quarters, respectively.
But after the financial regulator stiffened regulations on home loans in July and
September, the fourth-quarter growth eased to 9.8 trillion won, it added.
sooyeon@yna.co.kr
(END)