South Korean banks' household loans jumped in July, fueled by demand for home-backed lending and overdrafts for stock investments, central bank data showed Wednesday.

Outstanding bank loans to local households came to 1,040.2 trillion won (US$902 billion) as of end-July, up 9.7 trillion won from a month earlier, according to the data from the Bank of Korea (BOK).

It marked the largest on-month gain for any July since 2004 when the central bank began compiling related data.

The BOK said July's solid growth resulted from a sustained rise in mortgage loans and credit lending.

A large number of bank customers took bank loans to subscribe for initial public offerings of several companies, including internet-only lender Kakao Bank.

Banks' mortgage loans expanded by 6.1 trillion won on-month to 758.4 trillion won in July, compared with a 5.1 trillion won-increase the previous month.

Unsecured and other non-mortgage loans grew by 3.6 trillion won to 280.8 trillion won, compared with an on-month rise of 1.3 trillion won in June.

BOK Gov. Lee Ju-yeol has hinted at raising the benchmark interest rate within this year, stressing the need to orderly tighten accommodative monetary policy.

In July, the BOK left the policy rate at a record low of 0.5 percent amid the fourth wave of the pandemic.

A rate hike could increase debt-servicing burdens for households and companies. The country's household credit reached a record 1,765 trillion won as of end-March, up 9.5 percent from a year earlier. (Yonhap)