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Banks' household loan growth sharply slows in July

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(Globalpost/GlobalPost)

SEOUL, Aug. 7 (Yonhap) -- The growth of household loans by South Korean banks sharply slowed in July as housing transactions became sluggish after a tax benefit over home purchasing expired, the central bank said Wednesday.

Household loans by local banks, including home-backed and credit loans, reached 470 trillion won (US$421.4 billion) as of end-July, up 100 billion won from the previous month, according to the Bank of Korea (BOK).

In June, household loans grew 4.8 trillion won, the largest monthly growth in six months, as more people took out bank loans ahead of an end-June expiry of the government's tax break over home buying.

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

The BOK said that the slowed growth in household loans was also affected by a seasonal factor as housing transactions usually slow during rainy seasons.

If mortgage loans transferred to the state-run Korea Housing Finance Corp. are taken into account, household loans grew 2.8 trillion won last month, slowing from a 5.8 trillion won on-month increase in June.

Mortgage loans by local banks declined 14 billion won to 320.4 trillion won in July, it added.

Meanwhile, corporate lending by banks grew 4.1 trillion won to 616.4 trillion won in July on the back of increased lending to larger firms.

The growth of bank lending to small and medium enterprises rose 1.1 trillion won to 464 trillion won in July. Banks' lending to larger companies gained 3.1 trillion won to 152.5 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 third straight month in August.

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http://www.globalpost.com/dispatch/news/yonhap-news-agency/130807/banks-household-loan-growth-sharply-slows-july