Household loan growth at South Korean lenders accelerated in March from a month earlier on a surge in property transactions and solid demand for loans following a March 12 rate cut, central bank data showed Wednesday.
Household loans, which include mortgage lending, extended by local lenders reached 570.6 trillion won ($521.1 billion) as of the end of last month, gaining 4.6 trillion won on-month compared with a 3.7 trillion won gain in February, the preliminary data from the Bank of Korea showed.
The March gain is more than three times bigger than the gains in previous years. March household lending averaged at 1.3 trillion won between 2008 and 2014, according to BOK data.
Of the total, mortgage lending jumped by 4.8 trillion won to 418.4 trillion won, with its growth quickening from a 4.2 trillion won gain a month earlier.
The central bank attributed the unusually high growth to a sharp surge in home transactions. Apartment transactions in Seoul reached 13,100 units last month, nearly doubling from 8,600 a month earlier. The March reading is also two times the average 6,900 apartment transactions in the month of March between 2006 and 2014.
The data comes a day ahead of the central bank’s monthly rate-setting meeting.
In March, the BOK unexpectedly slashed the base rate to a record low of 1.75 percent, with governor Lee Ju-yeol stressing the need to further boost economic recovery momentum even after last year’s two rate cuts, in August and October, respectively.
In a poll by Yonhap Infomax, the financial news arm of Yonhap News Agency, 19 out of 20 analysts forecast the BOK will stand pat this month to gauge the impact of last month’s rate cut as well as monitor surging household debt.
Still, 9 out of 19 analysts projected an additional rate cut for the second quarter, a move that will send the base rate to a fresh low of 1.5 percent. One analyst did not submit a forecast for end-June. (Yonhap)