The growing pace of South Korean households’ borrowing slowed down for two years in a row last year amid the government-led tough regulations to tighten mortgage loans aimed at curbing soaring housing prices, central bank data showed on April 10.
Financial loans extended to households and nonprofit organizations increased by 103.1 trillion won ($90.1 billion) in 2018, down from 123.7 trillion won a year ago, according to the data by the Bank of Korea.
The decline in the borrowing growth came as financial institutions reduced longer-dated loans, including home-backed mortgages, last year, the central bank noted.
The amount has been on the decline for the past two years after peaking at 143.8 trillion won in 2016 as the Korean government made efforts to cool down the overheated real estate market.
The incumbent Moon Jae-in government, which took office in 2017, has churned out a series of anti-speculation measures, including the strongest one released in mid-September last year. It toughened loan-screening systems and increased taxes on home transactions.
At the same time, the BOK raised the policy rate two times to the current 1.75 percent.
The latest BOK data also showed that households and nonprofit organizations increased their savings by 152.4 trillion won last year, down from 174.6 trillion won in 2017.
By Ram Garikipati and newswires (firstname.lastname@example.org)