Household loans extended by South Korean lenders continued to trend higher in May as borrowers opted to lock in low interest rates for home purchases, central bank data showed Wednesday.
Outstanding household loans extended by local banks reached 586.4 trillion won ($522.7 billion) as of the end of last month, adding 7.3 trillion won from April, according to the Bank of Korea.
The monthly gain was smaller than a record 8.5 trillion won increase in April. The BOK explained that the number of apartment transactions in Seoul slightly slipped from a month earlier to 12,700 units but added that it was still higher than an average 6,300 units in the 2006-2014 period.
Of the total, home-backed lending amounted to 432.8 trillion won, up 6.3 trillion won from the previous month.
The data comes a day ahead of the BOK’s monthly rate-setting meeting.
In a poll by Yonhap Infomax, the financial news arm of Yonhap News Agency, nine out of 17 analysts and economists projected that the BOK will cut the rate to a fresh record low of 1.5 percent to contain downside growth risks stemming from Middle East Respiratory Syndrome.
South Korea has emerged as the world’s second-most MERS-infected country after Saudi Arabia, with the number of infections hitting 108 since the outbreak was first confirmed on May 20. As of Wednesday morning, nine fatalities have been reported and 2,892 people were quarantined for possible infection.
Still, nearly half of the respondents forecast the BOK to take a wait-and-see approach to gauge the impact of the viral respiratory illness and curb rapid household debt growth. (Yonhap)
