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Household debt growth accelerates in Q4

All News 12:00 February 25, 2020

SEOUL, Feb. 25 (Yonhap) -- The rise in household debt accelerated in the fourth quarter of 2019 but slowed for the entire year, central bank data showed Tuesday, apparently on government efforts to curb real estate speculation and limit household debt growth.

Outstanding household credit came to 1,600.1 trillion won (US$1.31 trillion) as of end-December, up 27.6 trillion won or 1.8 percent from three months earlier, according to preliminary data from the Bank of Korea (BOK).

The file photo, taken on Nov. 3, 2019, shows a placard at a Seoul bank advertising low interest rates for households and individuals. (Yonhap)

Household credit refers to overall debt owed by households, including outstanding credit card spending.

The increase marked an acceleration from a 15.8 trillion won or 1.0 percent on-quarter increase in the July-September period.

Also from a year earlier, the fourth-quarter tally marks a 63.4 trillion won or 4.1 percent rise compared with a 3.9 percent on-year increase in the third quarter.

Such an increase follows two policy rate cuts in July and October that sent the base interest rate to a record low of 1.25 percent in an attempt to boost the country's economic growth, which slowed to a 10-year low of 2 percent in 2019.

Still, the increase also follows a series of government measures to keep housing prices from rising, partly by limiting the rise in household borrowing.

In the October-December period, household loans added 23 trillion won to 1,504.4 trillion won, sharply accelerating from a 13.4 trillion-won rise three months earlier.

Home-backed loans gained 12.6 trillion won in the fourth quarter, picking up pace from a 9.5 trillion-won increase in the third quarter, according to the BOK.

On an annual basis, however, a 4.1 percent on-year gain marked a steady slowdown since 2016, when household credit jumped 11.6 percent or 139.4 trillion won from a year earlier.

The increase dropped to 8.1 percent the following year and again to 5.9 percent in 2018, before slowing to 4.1 percent last year.


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