Household loan grows at slowest pace ever in July

Household loans extended by South Korean institutions grew at their slowest pace ever in July as the property market remained sluggish amid the economic slowdown, the central bank said Tuesday.

Household lending handled by local banks and non-bank institutions totaled a record 647.6 trillion won ($573.5 billion) as of the end of July, up 4.6 percent from a year earlier, according to the Bank of Korea (BOK). Such lending grew by 1.7 trillion won on-month in July.

The July growth rate marked the slowest recorded since October 2004 when the BOK began to compile related data. The volume of the monthly expansion was also the smallest since a 100 billion won fall in March.

The data came as the Korean economy loses steam, hit by faltering exports and sputtering domestic demand. The property market is stuck in a slump as housing transactions remain lackluster due to prospects of price falls. The regulator's efforts to curb household debt also affected the slowing growth of such loans, the BOK added.

Banks' household loans, including home-backed lending, grew by 700 billion won on-month to 458.6 trillion won as of end-July, easing from a 1.2 trillion won gain in June, it added.

Banks' mortgage lending rose 400 billion won to 310.8 trillion won in July, softening from 1.1 trillion won gain the previous month.

The data came two days before BOK policymakers are to hold their monthly rate-setting session. More market watchers said the BOK is likely to cut the key rate to 2.75 percent in what would be the second rate cut this year, to prop up weak economic growth.

Korean policymakers are struggling to curb growing household debt as the private sector's high indebtedness is feared to crimp domestic demand, hurting economic growth. South Korea's household credit stood at 922 trillion won as of the end of June. (Yonhap)