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May household loans gain at fastest pace this year

All News 15:04 June 08, 2016

SEOUL, June 8 (Yonhap) -- Despite tougher mortgage loans, lending by South Korean banks to households in May rose at the fastest clip this year on increased collective loans, central bank data showed Wednesday.

Outstanding household loans extended by local lenders came to 660.9 trillion won (US$573 billion) as of end-May, up 6.7 trillion won from a month earlier, according to the data from the Bank of Korea (BOK).

It marked the sharpest on-month increase this year as well as an acceleration from the 5.3-trillion-won gain in the previous month.

"Home-backed household loans increased by 4.7 trillion won from the previous month in May due to greater demand for collective loans," the BOK said. Collective loans are often associated with the reconstruction of old apartments.

The May increase came after the government toughened rules for home-backed loans as part of efforts to contain ballooning household debt.

In the first five months of this year, bank household loans grew by 21.8 trillion won, down 17 percent from the 25.5 trillion won jump a year earlier.

In May, local lenders' outstanding corporate loans came to 744.1 trillion won, gaining 3.7 trillion won from the previous month and marking a sharp deceleration from the 6.7 trillion won surge in April, according to the data.

South Korea remains gripped by soaring household debt, which economists fear could dampen consumer spending amid slumping exports. As of end-March, overall household debt, which includes credit card spending, stood at 1,223.7 trillion won, compared to 1,098.3 trillion won a year earlier.

yskwak@yna.co.kr
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