Banks’ household loans snap 11-month rise in March amid high rates

Household loans extended by banks in South Korea fell for the first time in 11 months in March, led by a slowdown in mortgage loan growth, central bank data showed Thursday, amid worries that highly indebted households could pose a risk to Asia's fourth-largest economy amid high borrowing costs. Banks' outstanding household loans came to 1,098.6 trillion won (US$806 billion) as of end-March, down 1.6 trillion won from a month earlier, according to the data from the Bank of Korea (BOK). The March reading marks a fall from a 2 trillion-won rise the previous month and an on-month fall for the first time since April last year, the data showed. Banks' home-backed loans rose 0.5 trillion won to 860.5 trillion won last month, decelerating from a 4.7 trillion-won on-month gain the previous month, while unsecured and other types of loans fell 2.1 trillion won to 236.9 trillion won over the cited period, according to the data. Policymakers remained worried over a spike in household debts, which could sap further pr ivate spending. Borrowing costs in Asia's fourth-largest economy remain high following the BOK's aggressive monetary tightening aimed at bringing surging inflation under control. In February, South Korea's central bank held its key interest rate steady at 3.5 percent amid a slowdown in growth and moderating inflation. This marked the ninth straight time that the BOK has stood pat following rate freezes since February last year. The rate freezes came after the BOK delivered seven consecutive rate hikes from April 2022 to January 2023. This week, the central bank is widely expected to stand pat again. Banks' loans to companies also rose 10.4 trillion won last month, following the previous month's 8 trillion-won rise, the data showed. Source: Yonhap News Agency