The government’s efforts to tighten home-backed lending appear to be paying off.
Korean banks’ non-mortgage loans, which include lending through overdraft lines of credit, rose to $189.33b (202.t won) in April, representing the largest monthly growth recorded for April, according to central bank data.
Home backed mortgage gains slowed from $2.62b (2.8t won) in March to $2.25b (2.4t won) in April to stand at $542.19b (578.4t won). Outstanding household loans from lenders clocked in at $732.4b (781.7t won) as of end-April.
The slowdown comes as the government earlier tightened rules in home-backed lending, particularly for owners of multiple homes, in a bid to cool down the overheated property market and ensure that the mounting household debt remains in control.
A report from credit rating agency Fitch has singled out Korea amidst APAC markets whose rising levels of property exposure are raising associated risks.
“Consumers in developed markets with high household credit relative to income are increasingly susceptible to a rise in unemployment and interest rates, in combination with weak wage growth,” Fitch noted, adding that it can hurt the asset quality of banks.
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