South Korea’s household debt grew at a quickening clip last quarter, the latest in a series of datasets likely to deter the central bank from signaling a near-term policy pivot when authorities gather later this week.
Total household credit rose to 1,896 trillion won in the April-June period, up 1.9% from a year earlier, the Bank of Korea (BOK) said Tuesday. Mortgage loans, the biggest driver of credit, increased to 1,093 trillion won, marking a 5.9% rise from a year earlier.
Combined with an earlier BOK survey that showed consumers expect the housing market to heat up further, Tuesday’s credit numbers are certain to consolidate the views among economists that monetary authorities will keep the benchmark interest rate unchanged at 3.5%, a level considered restrictive, when they convene on Thursday.
BOK Governor Rhee Chang-yong expressed concerns about increases in household debt last month as home prices in Seoul continued to advance, raising the risks of financial imbalances. South Korea has one of the highest household debt-to-economy ratios in the world, with many people holding the bulk of their wealth in real estate.
While many economists expect the BOK to cut its rate in October, that prediction could be pushed back if the housing market continues to show signs of heating beyond August. An export rally led by artificial intelligence chips is adding to confidence among policymakers that the economy can continue to hum along even with policy settings at restrictive levels.
In a move that could help discourage private lending, South Korea’s Financial Services Commission said separately Tuesday that authorities will cut the mortgage loan limit for homes in the greater Seoul area from Sept 1.
- Bloomberg
Created by Tan KW | Aug 20, 2024
Created by Tan KW | Aug 20, 2024
Created by Tan KW | Aug 20, 2024
Created by Tan KW | Aug 20, 2024