SEOUL, Sept. 24 (Yonhap) -- South Korea's financial market continues to be stable, but concerns remain over a build-up of financial imbalances due to surging home prices, the Bank of Korea (BOK) said Friday.
In a regular report on financial stability, the BOK also called for vigilance against a rise in the debt of households and companies amid the COVID-19 pandemic.
The nation's financial stability index shot up to 22.3 in April last year, breaching the lower boundary for a crisis warning, but it has since come down to 2.1.
South Korea's household credit grew at a faster pace in the second quarter as non-banking financial firms increased loans.
Household credit reached a record high of 1,805.9 trillion won (US$1.54 trillion) in June, up 41.2 trillion won from three months earlier, according to the BOK data.
The second-quarter tally compared with a 37.6 trillion-won on-quarter rise in the first quarter.
The growth has shown no signs of letting up as more people have taken out loans to buy homes amid skyrocketing housing prices. Demand for unsecured loans also remains high amid a boom in stock investments.
In August, the BOK delivered its first pandemic-era rate hike to tackle rising inflation and rein in surging household debts, ending 15 months of record low interest rates amid signs of improvements.
It marked the first rate increase since May last year, when the BOK cut the key rate to a record low of 0.5 percent.
Earlier this month, the BOK said it will gradually adjust its monetary easing as it seeks to meet its inflation target of 2 percent for this year amid signs of a robust recovery from the COVID-19 pandemic.
However, the BOK said the timing of another rate hike will depend on a resurgence of COVID-19 infections and risks of financial imbalances.
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