S. Korea Banks Post Increase in October Household Lending
Aggregate household indebtedness at deposit-taking institutions climbed to 1,173.7 trillion won (797.2 billion U.S. dollars) by month's end, representing a 3.5 trillion won (2.4 billion dollars) monthly increase, the central bank reported.
The October acceleration outpaced September's 1.9 trillion won (1.3 billion dollars) advance, reinforcing an upward trajectory that commenced in February and shows no signs of moderating.
Residential lending dynamics revealed mixed signals. Mortgage originations expanded 2.1 trillion won (1.4 billion dollars) in October, decelerating slightly from September's 2.5 trillion won (1.7 billion dollars) injection. Underlying property market conditions remained volatile throughout the year, with apartment sales fluctuating between quarterly peaks—45,000 transactions in May, 35,000 in July, and 47,000 in September.
Non-mortgage household borrowing, encompassing consumer credit, revolving credit lines, and commercial real estate financing, rebounded sharply with 1.4 trillion won (951.0 million dollars) in new lending after contracting 500 billion won (339.6 million dollars) the previous month.
Analysts attribute the rebound to intensifying speculative activity in equity markets financed through borrowed capital and heightened consumer spending ahead of Chuseok, South Korea's traditional harvest celebration comparable to Thanksgiving.
Monetary policy shifts have created tailwinds for credit expansion. The BOK implemented consecutive rate reductions—25 basis points each in February and May—lowering the benchmark rate to 2.50 percent. These cuts followed earlier reductions of identical magnitude during October and November of the prior year.
Corporate sector borrowing demonstrated robust expansion, with total bank lending to enterprises reaching 1,366.0 trillion won (927.9 billion dollars) in October, up 5.9 trillion won (4.0 billion dollars) month-over-month.
Divergent lending patterns emerged across company segments. Large-cap corporations secured modest incremental funding of 200 billion won (135.9 million dollars), while small-to-medium enterprises captured substantially higher growth of 5.7 trillion won (3.9 billion dollars) in fresh credit facilities last month.
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