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Household credit growth slightly slows in Q4 last year

Bank loans (Yonhap)
Bank loans (Yonhap)
South Korea's household credit grew at a slightly slower pace in the fourth quarter of last year, as banks tightened rules on unsecured loans, central bank data showed Tuesday.

Household credit reached a record high of 1,726.1 trillion won ($1.55 trillion) as of December last year, up 44.2 trillion won from three months earlier, according to the data from the Bank of Korea (BOK).

Household credit refers to credit purchases and loans for households that have been extended by financial institutions, including commercial lenders and mutual savings banks.

The fourth-quarter tally compared with a 44.9 trillion-won on-quarter rise in the third quarter of last year.

However, the growth of household credit quickened last year.

Household credit grew by 125.8 trillion won in 2020, compared with a 63.6 trillion-won on-year rise in 2019.

Household lending extended by banks and other financial institutions reached 1,630.2 trillion won in the fourth quarter of last year, up 44.5 trillion won from three months earlier.

Mortgage loans rose 20.2 trillion won on-quarter to 910.6 trillion won in the fourth quarter, accelerating from a 17.4 trillion-won increase in the third quarter.

In the fourth quarter, loan demand to buy stocks also rose in line with the country's bull stock market. Despite the virus outbreak, Seoul's stock market gained ground amid ample liquidity sparked by a long streak of low rates.

Credit purchases stood at 95.9 trillion won as of end-December last year, down 200 billion won from three months earlier, the BOK said.

Korea's household debt has been repeatedly cited as the main drag on Asia's fourth-largest economy, as households' high indebtedness is feared to curb domestic demand and thus crimp economic growth. (Yonhap)