South Korea's household credit marked a slower growth in the third quarter than three months ago mostly due to a sharp decline in the growth of lenders' loans to households, the central bank said Friday.
According to the Bank of Korea (BOK), the outstanding household credit registered 770 trillion won (670 billion U.S. dollars) as of end-September, up 15.2 trillion won (13.2 billion U.S. dollars) from three months earlier or 8.0 percent from a year ago.
The Q3 quarter-on-quarter gain, however, was a slowdown from a 15.8 trillion won (13.7 billion U.S. dollar) expansion in the second quarter, the BOK said.
Household credit is composed of credit purchase and loans to households by financial institutions.
The deceleration was mainly attributed to a sharp fall in the amount of gain in loans to households by financial institutions, according to the central bank.
Loans to households by financial institutions advanced 13.4 trillion won (11.6 billion U.S. dollars) during the third quarter of 2010, the BOK said, but the amount of gain was smaller than a 15.1 trillion won (13.1 billion U.S. dollar) expansion during the preceding quarter.
In particular, mortgage loans grew by 2.8 trillion won (2.4 billion U.S. dollars) during the third quarter, sharply down from a 5.1 trillion won (4.4 billion U.S. dollar) rise.
Meanwhile, credit purchase registered an increase of 1.7 trillion won (1.5 billion U.S. dollars), ending the third quarter with a 45 trillion won (39.1 billion U.S. dollar) balance.
The data came after the central bank recently decided to revise up the key rate, once in July by 0.25 percentage point and again in November by the same amount.
In the wake of the global financial crisis, record-low borrowing costs have been accused as the main cause of household debt expansion, which triggered people to resort to mortgage loans for asset purchase purposes.
"As the demand for asset purchase declined, household credit stabilized," South Korean media reports explained.
