Bank mortgage loan growth slows in July

SEOUL, Aug. 10 (Yonhap) -- The growth of South Korean banks' mortgage loans slowed in July from the previous month after the government unveiled a set of measures to curb snowballing household debt, the central bank said Wednesday.
Local banks' home-backed lending totaled 297.3 trillion won (US$275.7 billion) as of the end of July, up 1.9 trillion won from the previous month, according to the Bank of Korea (BOK).
The monthly growth of bank mortgage loans slowed from a 2.3 trillion won gain tallied in June mainly because local banks refrained from extending home-backed lending.
But if the sale of mortgage loans by banks to the state-run Korea Housing Finance Corp. is taken into account, mortgage loans expanded by 2.6 trillion won in July, similar to a 2.7 trillion won expansion in June.
Local banks' home loans, including mortgage loans, reached 445.5 trillion won as of end-July, up 2.3 trillion won from the previous month, according to the BOK.
The data came as the government unveiled a set of measures to curb snowballing household debt in June by tightening banks' loan-to-deposit ratios and mending banks' lending practices. Household debt surpassed the 800 trillion won mark on the back of a long streak of low rates and the economic recovery.
Meanwhile, South Korean banks' corporate lending sharply rose in July as local lenders extended loans to smaller firms amid tightened rules in home-backed lending and large companies' loan demand for operating funds advanced, it added.
Corporate loans by local banks rose 5.9 trillion won on-month to 545.7 trillion won, a turnaround from a 3.2 trillion won decline in June.
Bank lending to large firms grew 3.2 trillion won on-month to 102.7 trillion won and lending to smaller companies rose 2.8 trillion won to 443 trillion won.
The data came one day before the BOK holds its monthly rate-review meeting. Analysts forecast that the central bank is likely to freeze the key interest rate at 3.25 percent for the second straight month amid concerns about a global double-dip downturn. The bank raised the borrowing costs in January, March, June in a bid to stem inflation.