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Home-backed loans from major local banks increased at the fastest clip in five years in 2015 amid a surge in home transactions and home rental fees, market data showed Thursday.
According to the data from local lenders, outstanding home-backed loans extended by six major banks here came to 349.5 trillion won ($291.3 billion) at the end of 2015, up 32.6 trillion won from a year earlier.
In reality, however, the total grew by 60.4 trillion won on-year when considering 27.8 trillion won worth of bank loans was sold to the state-run Korea Housing-Finance Corp. under a government program to help borrowers convert their short-term floating rate mortgages into long-term fixed rate loans.
The amount marks the fastest rate of increase in home-backed loans since 2011 and is more than double the 30.1 trillion-won growth in 2014, the local banks said.
Such an increase in home-backed loans was largely attributed to a surge in demand for homes, which in turn also pushed up home rental prices.
In the first 11 months of last year, the number of home transactions spiked 21 percent from the same period a year earlier, the Ministry of Land, Infrastructure and Transport said earlier.
Home rental fees, called jeonse here, gained 6.11 percent on-year for apartment units, quickening from 4.36 percent in 2014, while rental fees for apartment units in the capital Seoul spiked 18.6 percent.
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 of the large deposit before returning the entire amount when the rental contract expires.
The large increase in home-backed loans has apparently led to a surge in overall household debts, which reached a record high of 1,166.4 trillion won as of end-September.
Market observers believe the rise in home-backed loans, as well as overall household debts, will begin to slow in the near future following the first U.S. rate hike in nearly a decade late last year that will likely prompt rate hikes here down the road. (Yonhap)
According to the data from local lenders, outstanding home-backed loans extended by six major banks here came to 349.5 trillion won ($291.3 billion) at the end of 2015, up 32.6 trillion won from a year earlier.
In reality, however, the total grew by 60.4 trillion won on-year when considering 27.8 trillion won worth of bank loans was sold to the state-run Korea Housing-Finance Corp. under a government program to help borrowers convert their short-term floating rate mortgages into long-term fixed rate loans.
The amount marks the fastest rate of increase in home-backed loans since 2011 and is more than double the 30.1 trillion-won growth in 2014, the local banks said.
Such an increase in home-backed loans was largely attributed to a surge in demand for homes, which in turn also pushed up home rental prices.
In the first 11 months of last year, the number of home transactions spiked 21 percent from the same period a year earlier, the Ministry of Land, Infrastructure and Transport said earlier.
Home rental fees, called jeonse here, gained 6.11 percent on-year for apartment units, quickening from 4.36 percent in 2014, while rental fees for apartment units in the capital Seoul spiked 18.6 percent.
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 of the large deposit before returning the entire amount when the rental contract expires.
The large increase in home-backed loans has apparently led to a surge in overall household debts, which reached a record high of 1,166.4 trillion won as of end-September.
Market observers believe the rise in home-backed loans, as well as overall household debts, will begin to slow in the near future following the first U.S. rate hike in nearly a decade late last year that will likely prompt rate hikes here down the road. (Yonhap)
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