ID :
205089
Sun, 09/04/2011 - 11:58
Auther :
Shortlink :
https://oananews.org//node/205089
The shortlink copeid
Watchdog eyes steps to control home loans by non-bank institutions
SEOUL, Sept. 4 (Yonhap) -- South Korea's top financial regulator said Sunday that the watchdog is considering measures to curb an excessive rise in household loans extended by non-bank institutions in a bid to stem snowballing household debt.
"In August, the growth of non-bank firms' household loans was faster than that of banks' home loans. The watchdog will consider how to lower the high growth rate of household lending offered by non-bank institutions," Financial Supervisory Service (FSS) Gov. Kwon Hyouk-se said in an interview with Yonhap News Agency.
South Korea is grappling with growing household debt, which reached 876.3 trillion won (US$825.1 billion) as of end-June.
Growing household debt is viewed as the main constraint for the local economy as high household indebtedness will likely dent domestic demand, thereby crimping the economic growth.
Household loans extended by local banks and non-bank firms are estimated to have grown by more than 6 trillion won in August despite the regulator's efforts to curb home debt.
Several local banks halted the extension of fresh household loans in August in an effort to meet the watchdog's unofficial guideline that set the monthly growth of household loans to around 0.6 percent.
"The monthly growth of home loans by non-bank firms reached over 1 percent last month. ... The regulatory authorities should study how to curb loan growth by non-bank institutions," Kwon said. "But the efforts to tackle household debt should be made over the long haul in a way that doesn't shock the overall economy."
Kwon, meanwhile, said that the Bank of Korea (BOK), the country's central bank, should do its part in tackling the growing household debt.
"The BOK needs to play its role in boosting financial stability or coping with household debt. More data sharing and cooperation between the BOK and the financial authorities will help resolve this problem," he said.
Kwon's remarks are widely viewed as exceptional as the head of the watchdog effectively called for the central bank to hike the key rate.
Household debt has been on the rise as people have been able to easily take out loans amid the long streak of low borrowing costs, driven by the BOK's aggressive rate cuts.
The BOK kicked off its tightening cycle in July by raising the key rate by a combined 1.25 percentage points to 3.25 percent, but many analysts argue that the central bank was behind the curve in normalizing the soft policy stance.
The central bank's rate hikes could increase households' burdens to service debt, but a delay in raising the borrowing costs also aggravates their indebtedness.
sooyeon@yna.co.kr
"In August, the growth of non-bank firms' household loans was faster than that of banks' home loans. The watchdog will consider how to lower the high growth rate of household lending offered by non-bank institutions," Financial Supervisory Service (FSS) Gov. Kwon Hyouk-se said in an interview with Yonhap News Agency.
South Korea is grappling with growing household debt, which reached 876.3 trillion won (US$825.1 billion) as of end-June.
Growing household debt is viewed as the main constraint for the local economy as high household indebtedness will likely dent domestic demand, thereby crimping the economic growth.
Household loans extended by local banks and non-bank firms are estimated to have grown by more than 6 trillion won in August despite the regulator's efforts to curb home debt.
Several local banks halted the extension of fresh household loans in August in an effort to meet the watchdog's unofficial guideline that set the monthly growth of household loans to around 0.6 percent.
"The monthly growth of home loans by non-bank firms reached over 1 percent last month. ... The regulatory authorities should study how to curb loan growth by non-bank institutions," Kwon said. "But the efforts to tackle household debt should be made over the long haul in a way that doesn't shock the overall economy."
Kwon, meanwhile, said that the Bank of Korea (BOK), the country's central bank, should do its part in tackling the growing household debt.
"The BOK needs to play its role in boosting financial stability or coping with household debt. More data sharing and cooperation between the BOK and the financial authorities will help resolve this problem," he said.
Kwon's remarks are widely viewed as exceptional as the head of the watchdog effectively called for the central bank to hike the key rate.
Household debt has been on the rise as people have been able to easily take out loans amid the long streak of low borrowing costs, driven by the BOK's aggressive rate cuts.
The BOK kicked off its tightening cycle in July by raising the key rate by a combined 1.25 percentage points to 3.25 percent, but many analysts argue that the central bank was behind the curve in normalizing the soft policy stance.
The central bank's rate hikes could increase households' burdens to service debt, but a delay in raising the borrowing costs also aggravates their indebtedness.
sooyeon@yna.co.kr
