South Korea’s money supply saw further growth in October, as businesses and households continued its rush to secure funds amid the COVID-19 pandemic, central bank data showed Tuesday.

The country’s M2 – a yardstick for the nation’s cash, checking deposits and other near money deposits – gained 9.7 percent on-year and 1.1 percent on-month to 3,150.5 trillion won ($2.8 trillion) as of end-October.

The 1.1 percent or 34.7 trillion won on-month gain is the second-largest gain the country’s M2 has seen since the Bank of Korea started compiling the data in 1986. The largest was the 35.4 trillion won gain observed in May this year.

Funds held by households and non-profit organizations increased by 18.5 trillion won on-month. Those held by businesses gained 10.7 trillion won in the same period.

On the increase in funds held by households, which marked the largest gain since June 2006, when the corresponding figure stood at 21.1 trillion won, the BOK cited an inflow of Chuseok holiday bonuses.

By products, savings deposits with transferability gained the most with a 9.6 trillion increase and demand deposits saw an increase of 7 trillion won, in the same period.

Tuesday’s data comes as the government has been funneling liquidity into the market and the nation’s outstanding household and corporate loans have been surging at alarming rates.

Fueled by solid demand for home-backed lending, the value of outstanding bank loans to local households came to 982.1 trillion won as of end-November, up 13.6 trillion won from the previous month, a separate BOK data released last week showed. Meanwhile, Banks‘ mortgage loans grew 6.2 trillion won on-month to 715.5 trillion won in the same month.

Outstanding corporate loans totaled 981.9 trillion won at the end of November, up 6.7 trillion won from the previous month, the data showed.

Experts have cited the record-low benchmark interest rate of 0.5 percent coupled with uncertainties surrounding the coronavirus risks that have pushed Koreans towards heavier borrowing.

Asia’s fourth-largest economy’s heated housing market has failed to cool down, despite the Moon Jae-in administration’s implementation of more than 20 sets of measures centered on levying heavier tax on multiple homeowners and imposing stricter loan regulations.

Banks, apparently concerned over their financial soundness and following requests from financial authorities, have even stopped handing out loans to certain groups for this year.

The delinquency rate for won-denominated loans stood at 0.34 percent at the end of October with the rate for bank loans more than 30 days overdue up 0.04 percentage point from September, according to the Financial Supervisory Service.

By Jung Min-kyung (mkjung@heraldcorp.com)