Korea's household loans grow most in 6 months

The Bank of Korea said Thursday (June 19) that Korean financial institutions' household lending increased by the largest margin in six months in April, mainly due to sharp growth of home-backed lending.

Outstanding household loans by commercial banks and non-banking financial institutions amounted to 485.3 trillion won ($472.8 billion) as of the end of April, up 1 percent from a month earlier, the central bank said.

The 4.9 trillion-won gain in April was the largest monthly gain since October 2007 when household loans grew by 5.1 trillion won.

Home-backed loans by local banks expanded 2.3 trillion won on-month to 226.6 trillion won in April, marking the biggest monthly expansion in 16 months, the BOK said.

Korea's money supply grew at the fastest pace in more than five years in April on the back of ample liquidity provided by financial institutions.

The central bank froze its key interest rate at 5 percent in June for the 10th straight month on inflation woes. The Bank of Korea has held the policy rate steady since its first back-to-back increases in July and August last year to curb rising liquidity, which could stoke inflation and an asset bubble.