South Korean banks to tighten household lending in Q3: BOK

Banks expect mortgage demand to decrease and corporate loans to rise.

South Korea’s domestic banks expect to tighten their lending standards in the third quarter, mainly on household loans, according to a Bank of Korea (BOK) survey.

The banks expect credit risks to increase for both loans tied to corporations and households, according to the survey.

In the survey, the banks said that they expect demand for corporate loans and unsecured household loans to increase.

Demand for household mortgage loans is expected to decrease in Q3.

BOK data showed that household loans increased “significantly” in June, driven by a rise in housing transactions in the Seoul metropolitan area, which in turn lifted mortgage loans by $2.85b (KRW4.3t).

In a separate report, the central bank said that lending to the corporate sector grew by a smaller margin in June as less loans were extended to small and medium enterprises (SMEs).