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Banks' household loan growth hits 6-month high in June

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(Globalpost/GlobalPost)

SEOUL, July 10 (Yonhap) -- Household loans by South Korean banks rose by the largest amount in six months in June as more people took out mortgage loans ahead of the end to a tax benefit over home purchasing, the central bank said Wednesday.

Household loans by local banks, including home-backed and credit loans, reached 469.9 trillion won (US$411.3 billion) as of end-June, up 4.8 trillion won from the previous month, according to the Bank of Korea (BOK).

The June data marked the largest monthly increase since December 2012 when such lending grew 4.9 trillion won.

If mortgage loans transferred to the state-run Korea Housing Finance Corp. are taken into account, household loans grew 5.8 trillion won last month, the biggest increase since November 2006.

The BOK said that the rise in banks' household lending came as housing transactions increased ahead of an end-June expiry of the government's tax break over home buying.

The tax break is part of the government's set of measures to boost the slumping property market.

Mortgage loans by local banks grew 3.8 trillion won on-month to 320.4 trillion won in June, up from a 1.9 trillion won gain in May. The June data marked the largest gain since a 5 trillion won on-month gain in December last year.

Meanwhile, corporate lending by banks grew 3.1 trillion won to 612.3 trillion won in June as banks remained lenient toward smaller companies, the BOK said.

The growth of bank lending to small and medium enterprises rose 3.2 trillion won to 462.9 trillion won, up from a 2.7 trillion won gain in May. But banks' lending to larger firms fell by 100 billion won to 149.4 trillion won, it added.

The data came one day before the BOK holds its monthly rate-setting session. Analysts said that the BOK is expected to freeze the key rate at 2.5 percent for the second straight month in July.

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http://www.globalpost.com/dispatch/news/yonhap-news-agency/130710/banks-household-loan-growth-hits-6-month-high-june