Household loans by commercial banks have risen to the highest level in nine years, driven by record low interest rates and an upbeat property market, data from the financial regulator showed Wednesday.

According to the Financial Supervisory Service, the first-tier banking sector’s won-denominated outstanding loans to borrowers including households and enterprises came to 1.29 quadrillion won ($1.1 trillion) in April, an increase of 15 trillion won from a month before or 1.2 percent. Of this, household loans accounted for 534 trillion won, posting a month-on-month growth of 8.8 trillion won.


The April growth ― for the month every year ― hit a record high since the FSS started to compile official statistics on the banking sector’s collective household lending in 2006. It was also higher by around 100 percent compared to 4 trillion won growth in March.

Regulatory officials attributed the drastic loan increase to more active purchases of apartments by households taking advantage of the record low key rate, which was cut by 25 basis points to 1.75 percent in mid-March.

Trading volume of apartments in Seoul came to 13,900 units in April, far exceeding 85,000 units a year earlier.

Meanwhile, the Bank of Korea said Wednesday that the combined outstanding household debt reached 1.09 quadrillion won in the first quarter of 2015, up 11.6 trillion won, or 1.1 percent, from the previous quarter.

It also recorded a growth of 74.4 trillion won, compared to 1.02 quadrillion won in the first quarter of 2014.

The total household debt, calculated by the central bank, includes consumers’ borrowings from credit card issuers, stock brokerage firms, insurance firms, private moneylenders as well as first-tier banks.

Its yearly growth, which peaked at 73 trillion won in 2011, slowed down in 2012 with 47.6 trillion won.

But it started to increase in 2013, when it grew to 57.6 trillion won due to the growth of housing-collateralized lending.

By Kim Yon-se (kys@heraldcorp.com)