Private loans surge by record $189 billion in South Korea last year

2021.01.14 14:33:43

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Private debt surged by record levels of around $189 billion in South Korea last year amid Covid-19 pandemic and frenzied chase after housing and stocks from cheap liquidity.

According to the data released by the Bank of Korea (BOK) on Thursday, the nation’s outstanding household debt extended by banks totaled 988.8 trillion won ($896.9 billion) as of the end of December last year, up 100.5 trillion won from a year ago.

The on-year growth is the largest since the central bank began compiling related data in 2004.

Mortgage-backed borrowings increased 68.3 trillion won from the previous year to 721.9 trillion won as of late 2020. Other loans such as credit loans rose 32.4 trillion won to 266 trillion won.

The gain in mortgage-backed lending is the second largest since 2015, and that in other loans the largest-ever since the data became available in 2004.

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The central bank said the household loans ballooned last year due to the increased housing transactions as well as deteriorated financial condition amid Covid-19. The growth was also led by rising demand for stock investment funds.

In December alone, household debt grew 6.6 trillion won from the previous month. The growth slowed down compared to a 13.7 trillion won on-month increase in November, due to the plunge in monthly gain in other loans.

Mortgage-backed loans, however, rose slightly last month because loans for jeonse, the nation’s unique two-year lease system, soared at the second-fastest pace since February last year.

Banks’ won-denominated corporate loans stood at 976.4 trillion won as of late 2020, up 107.4 trillion won from a year ago. It also marks the sharpest on-year growth since related data became available in 2009.

By Choi Mira

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