Household credit in South Korea increased at the fastest clip ever in the second quarter, data showed Tuesday, further adding to concerns that borrowers will take a blow from a much-awaited rate hike in the United States.
Household credit totaled a fresh record 1,130.5 trillion won ($948.4 billion) as of end-June, up 32.2 trillion won from a revised 1,098.3 trillion as of the end of March, according to the data compiled by the Bank of Korea (BOK).
The monthly increase also marks the sharpest on-month gain since the BOK began compiling the data in 2002. It is also nearly three times bigger than the gain posted three months earlier.
Household credit's quarterly gain tends to be relatively slow in the first quarter, when people borrow less after receiving end-year bonuses.
Household credit refers to credit purchases and loans extended by financial institutions, including commercial lenders and mutual savings banks.
Of the total, household debt reached 1,071 trillion won, also growing a record 31.7 trillion won from the previous quarter.
Credit purchases gained 531.5 billion won on-quarter to 59.5 trillion won, compared with a 1.2 trillion won decline three months earlier, according to the central bank.
Household debt has been a chronic bugbear for policymakers as the rapid increase of the liabilities, in addition to the sheer size of it, is feared to sap consumption and possibly trigger a credit risk once rates begin moving higher.
The country's sizable household debt is also a factor that is seen as deterring an additional rate cut for the time being. Earlier this month, the central bank left the key interest rate unchanged for a second straight month, leaving the key rate at a record low of 1.5 percent. (Yonhap)