(LEAD) Growth in bank lending to households accelerates in September despite tightening of lending rules

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(ATTN: RECAST title, ADDS BOK manager’s comments to paragraphs 5-6)

SEOUL, Oct. 13 (Yonhap) – Household loans from South Korean banks grew at a faster pace in September compared to the previous month, despite tightened government controls on lending, according to bank data central this Wednesday.

According to the Bank of Korea (BOK), outstanding household bank loans stood at 1,052.7 trillion won ($ 877.9 billion) at the end of September, up 6.5 trillion won per year. compared to the previous month.

The figure is higher than an increase of 6.1 trillion won in August, according to the data. The reading also marked the second largest monthly expansion for September since the relevant data began to be compiled in 2004.

The increase is attributable to an increase in unsecured bank loans and other non-mortgage loans, which rose 800 billion won from the previous month, the data showed.

“An upward trend in line with what was reported in August continued due to demand for home purchase loans and ‘jeonse’,” a BOK official said.

Jeonse refers to a unique home rental system in South Korea in which tenants pay a large sum of money as a deposit instead of paying a monthly fee.

Mortgages stood at 769.8 trillion won in September, up 5.7 trillion won from the previous month. The figure was down slightly from an increase of 5.8 trillion won a month earlier.

The surge in household lending in September came despite tightened government lending regulations, amid concerns that household debt was spiraling out of control and undermining economic growth.

On Tuesday, the BOK kept its key rate unchanged at 0.75% for October, but hinted at another rate hike before the end of this year after a quarter-percentage point hike in August in the goal curb inflation and household debt.

At the same time, bank loans to businesses stood at 1,049 trillion won at the end of September, up 7.7 trillion won from the previous month. Growth was slightly lower than the 7.9 trillion won recorded in August.


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