South Korea’s household credit rose to a fresh record high in the fourth quarter as the government’s temporary housing tax benefits raised demand for mortgage loans, the central bank said Thursday.

Household credit totaled 959.4 trillion won ($997.2 billion) as of the end of December, up 23.6 trillion won from three months earlier, in contrast to an 11.8 trillion won gain in the third quarter, according to the Bank of Korea.

The on-quarter growth picked up, but compared with a year earlier, the growth of household credit slowed to 5.2 percent from 5.4 percent in the third quarter, extending its on-year slowdown into the sixth straight quarters.

Household credit refers to credit purchases and loans for households extended by financial institutions, including commercial lenders and mutual savings banks.

A pick-up in household credit growth came as the government’s temporary housing tax benefits raised demand for banks’ mortgage lending, the central bank said.

The tax benefit over home purchases, which expired at the end of last year, aimed to bolster the lackluster property market. The longstanding economic slowdown and the falling trend of housing prices are feared to spark risks of mortgage delinquency.

Household lending by banks and non-bank depositary institutions totaled 659.9 trillion won as of end-2012, up 11.3 trillion won from three months earlier.

The quarterly growth picked up from a 2.7 trillion won gain in the third quarter, the BOK said. Banks’ mortgage loan grew 5.4 trillion won to 316.9 trillion won in the fourth quarter.

Credit purchases stood at 58.8 trillion won as of the end of December, up 3.8 trillion won from three months earlier, it added.

Korea’s household debt has been repeatedly cited as the main drag on Asia’s fourth-largest economy because households’ high indebtedness is feared to curb domestic demand and thus crimp economic growth. (Yonhap News)