S. Korea’s household loan growth slows in September

South Korea’s household loan growth slowed in September due to tighter lending rules and the extended Chuseok holiday. Data from five major banks showed a total loan balance of 728.9 trillion won, up slightly 2.72 trillion won from August.

Given the current pace, the total monthly increase for September is projected to be around 4.1 trillion won, which is significantly lower than the 8.5 trillion won increase in August.

As of last Thursday, mortgage loans increased by 2.65 trillion won this month. If this trend continues, the total gain for September is expected to be around 4 trillion won, or 45 percent of the August increase.

Market analysts attributed the slowdown to the extended Chuseok holiday, government restrictions on home loans, and lenders’ tightened lending policies in the greater Seoul area.

“While direct comparison is difficult due to the holiday effect, there is definitely a noticeable difference compared to last month when mortgage loans were issued at record levels and speed,” a market observer said.

The slowdown in household loan growth has led some to speculate that the Bank of Korea might consider lowering interest rates as early as next month, following the recent rate cut by the US Federal Reserve.

Attribution: Yonhap News Agency

Subediting: M. S. Salama