The household debt extended by banks in South Korea slowed sharply in January from a month earlier due to a seasonal factor, central bank data showed Tuesday.

Fresh bank loans extended by banks to local households came to 3.7 trillion won ($3.1 billion) in the month, compared with a 7.2 trillion won increase the previous month, according to the data from the Bank of Korea.

The amount marks a sharp rise from a 1.1 trillion won increase in the same month last year, however.

"The rate of increase in bank loans to households slowed in January from a month earlier, partly due to a seasonal factor," the BOK said, noting the demand for home mortgages usually diminishes during the winter season.

In January, fresh home-backed loans extended by banks reached 4.3 trillion won, down from 5.6 trillion won the month before.

Local households also trimmed their other borrowing by 600 billion won, apparently using their yearend and Lunar New Year holiday bonuses to pay back some of their existing loans, the BOK said.

As of the end of January, outstanding bank loans to households came to 892 trillion won.

Bank loans to local companies, on the other hand, rose sharply in January, one month after the firms net reduced their borrowing by 6.2 trillion won.

Corporate loans jumped 8.6 trillion won last month, bringing the outstanding loans to 877.5 trillion won.

Bank deposits dropped by 15.1 trillion won to 1,734.2 trillion won as of end-January. (Yonhap)