Excess cash held by South Korean households and non-profit organizations fell in the second quarter from three months earlier as domestic spending picked up with more people purchasing homes amid a great surge in home rental fees, central bank data showed Wednesday.

Excess funds held by households and non-profit agencies here came to 24.9 trillion won ($21.01 billion) at the end of June, down from 29.6 trillion won at end-March, according to the data from the Bank of Korea.

Excess funds refer to money that remains on the balance sheets of holders after deducting their deposits and financial investments.

The central bank attributed the drop to increased investments in properties.

Amid government efforts to boost the local economy, the country's key interest rate has been kept at a record low of 1.5 percent since June.

This has apparently affected the country's home rental market as large deposits for home rentals, called jeonse here, no longer yielded enough profit for landlords.

Jeonse is a home rental system unique to South Korea where tenants pay a large sum of money as a deposit instead of paying monthly fees. Landlords profit off the large deposit before returning the entire amount when the rental contract expires.

Many areas in Seoul have reported a surge of over 100 million won in jeonse prices over a short period of one or two years, forcing people to borrow more to pay for the increased amount or to simply buy homes themselves.

In the first half of the year, the number of home transactions here came to 610,796, spiking 29.1 percent from the same period last year, according to earlier data from the Ministry of Land, Infrastructure and Transport. The figure set a record first half high, with the ministry compiling such data since 2006.

Non-financial firms, meanwhile, continued to face a capital shortage, which widened from 4.4 trillion won in the first quarter to 5.2 trillion won.

The overseas account saw its shortage jump to 32.7 trillion won at the end of June from 27.3 trillion won three months earlier. (Yonhap)