Steady mortgage lending boost South Korean bank loans to $491.76b in August

Residents have been turning to banks as property prices pick up.

The household loan balance held by South Korea’s top five banks - KB Kookmin, Shinhan, Woori, KEB Hana and Nonghyup - rose by $4.14b (KRW4.65t) to $491.76b (KRW552.39t) in August on the back of a heated mortgage uptrend, reports The Korea Herald. 

Also read: South Korea's big banks poised to hit year-end offshore profit record

Outstanding home-backed loans hit $349.22b (KRW392.28t) to mark the largest monthly increase since November 2016.

This comes as residents have been turning to banks to finance their home ownership aspirations after real estate market rallied with apartment prices in Seoul rising 7.37% YoY and 1.17% MoM in August.

Credit loans also performed strongly in the household lending mix after hitting $92.14b (KRW103.51t) in August.

A report from credit rating agency Fitch has singled out Korea amidst APAC markets whose rising levels of property exposure are raising associated risks.

“Consumers in developed markets with high household credit relative to income are increasingly susceptible to a rise in unemployment and interest rates, in combination with weak wage growth,” Fitch noted, adding that it can hurt the asset quality of banks.