Household debt from credit loans down for 1st time in decade amid rising borrowing costs
Song Jae-chang, chief of the BOK's financial statistics team, speaks during a conference at Bank of Korea in Seoul, May 24. Yonhap
Korea's household debt from credit loans shrank for the first time in about a decade in the first quarter of the year amid rising borrowing costs and tough lending rules, central bank data showed Tuesday.
This form of outstanding household debt came to 1,859.4 trillion won ($1.47 trillion) as of the end of March, down 600 billion won from three months earlier, according to the preliminary data from the Bank of Korea (BOK).
This marked the first quarter-on-quarter decline since the first quarter of 2013. The shrinkage also came in contrast with a revised 17.1 trillion-won rise tallied three months earlier.
Household debt includes credit purchases and loans for households extended by financial institutions
Outstanding household lending had come to 1,752.7 trillion won as of end-March, down 1.5 trillion won from three months earlier, the data showed. It was the first quarter-on-quarter decline since relevant data began to be compiled in 2002.
Of the household lending, mortgages stood at 989.8 trillion won at the end of March, up 8.1 trillion won from three months earlier. But the growth was slower than the previous quarter's 12.7 trillion-won rise amid slowing home transactions, the BOK said.
The decline in household credit is attributed to rising borrowing costs in tandem with the central bank's push to tighten monetary policy to tame inflation. In April, the BOK raised its policy rate by a quarter percentage point ― the fourth increase since August last year ― to 1.5 percent.
Also contributing to the fall is the government's tough rules on lending put in place to rein in growing household debt which has emerged as a potential risk factor for the economy. (Yonhap)