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household loans-January tally

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(Globalpost/GlobalPost)

SEOUL, March 12 (Yonhap) -- Household loans extended by South Korean financial institutions fell by the largest amount ever in January as mortgage lending declined on an expiration of the government's temporary tax breaks on housing purchases, the central bank said Tuesday.

Household lending handled by local banks and non-bank institutions totaled 656.2 trillion won (US$599.3 billion) as of the end of January, down 3.6 trillion won from the previous month, according to the Bank of Korea (BOK).

The January fall marked the first monthly decline since September last year and the largest slide since 2003 when the BOK began to compile related data.

An official at the BOK said mortgage lending declined in January mainly because of the government's tax benefit for home purchases expired at the end of last year. The tax break was aimed to bolster the sagging property market.

South Korea's property market is in the doldrums as the local economy loses ground and more people are holding back from purchasing homes on prospects that housing prices will fall further.

But if mortgage loans transferred to the state-run Korea Housing Finance Corp. are taken into account, the January loans inched up 500 billion won, according to the BOK.

Banks' household loans, including home-backed lending, declined 3.4 trillion won on-month to 463.8 trillion won as of end-January, a turnaround from a 4.8 trillion won gain in December, it added.

The data came two days before BOK policymakers are to hold their monthly rate-setting session. More analysts are betting on a rate freeze for this month, saying that the global economy shows signs of improving. The BOK left the key rate unchanged at 2.75 percent for the fourth straight month in February.

South Korean policymakers are struggling to curb growing household debt as the private sector's high indebtedness is feared to crimp domestic demand, hurting economic growth. South Korea's household credit stood at 959.4 trillion won as of end-December.

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http://www.globalpost.com/dispatch/taxonomy/term/39093/130312/household-loans-january-tally