South Korea’s household debts, though standing at an alarming level, are under control as a stabilizing housing market and regulatory steps to stem their growth have capped risks, a global investment bank said Tuesday.

Goldman Sachs said in a report that the growth pace of home-backed lending here has slowed in recent months, curbing the overall rise in household liabilities, according to the Korea Center for International Finance.

The country’s household credit, which includes credit purchases and loans extended by mutual savings banks, reached a fresh record high of 937.5 trillion won ($874.7 billion) as of the end of September.

Heavy household debts have surfaced as a major drag on the economy, since it crimps private consumption and saps domestic demand.

Despite the grim figures, the U.S.-based IB noted the faltering local property market has contributed to stemming the growth of mortgages.

It also cited a slew of countermeasures to the steep rise in household debts by the financial regulator in a bid to engineer a soft-landing.

Since June last year, the Financial Services Commission has provided heavy borrowers with a way to restructure their loans with a longer maturity at a cheaper interest rate through banks. From February this year, the watchdog began to limit household lending by non-banking institutions.

Goldman Sachs projected the regulator’s toughened stance on capping the extension of loans will likely continue for some time.

The IB dismissed the possibility of household debts spreading to a crisis in the financial system, citing the portion of those prone to high default risks stands below 1 percent of the total borrowers.

However, it recommended that the government continue its policy efforts to help low-income borrowers turn around, as they are the most vulnerable to the economic downturn, according to the KCIF report. (Yonhap News)