S.Korea's household debt keeps growing on record-low interest rate

Source: Xinhua | 2020-07-10

South Korea's household debt kept growing in June on a record-low interest rate, central bank data showed Thursday.

Debt, owed by households to banks, reached 928.9 trillion won (776.9 billion U.S. dollars) as of the end of June, up 8.1 trillion won (6.8 billion U.S. dollars) from a month earlier, according to the Bank of Korea (BOK).

It was the biggest June expansion since the BOK began compiling the data in 2004.

The growth was attributed to a record-low borrowing cost. The BOK lowered its key rate by 25 basis points to an all-time low of 0.50 percent in May, after slashing the rate by 50 basis points in March.

Households' mortgage loan, extended by banks, went up 5 trillion won (4.2 billion U.S. dollars) from a month earlier to 685.8 trillion won (573.7 billion U.S. dollars) at the end of June.

Credit loan, which households borrowed from banks, expanded by 3.1 trillion won (2.6 billion U.S. dollars) in the month.

Banks' corporate loan rose 1.5 trillion won (1.3 billion U.S. dollars) to 946.7 trillion won (791.9 billion U.S. dollars) in June.

Banks' loan to companies jumped 27.9 trillion won (23.3 billion U.S. dollars) in April and 16 trillion won (13.4 billion U.S. dollars) in May each.

Big corporations repaid bank debt last month ahead of the end of the second quarter.