Growth of mortgage loans in South Korea will likely slow down sharply in 2016 from last year as the government tightens its grip on fast-rising home-back lending, a report showed Friday.

Local banks' mortgage loans are expected to grow at a rate of 5 to 6 percent in 2016, according to the report by the Korea Center for International Finance, citing a global investment bank, JP Morgan.

The growth pace has been accelerating in recent years, hitting

11 percent in 2014 and 10 percent for the first 10 months of 2015, compared with 5.8 percent and 6.6 percent in 2010 and 2011, respectively.

Morgan Stanley also forecast that home-backed loans extended by local banks will go down to around 6 percent this year as South Korea's real estate market will likely remain dull.

Soaring household debt has been a big headache for policymakers in the face of a U.S. rate increase and a slowdown in China, prompting the Seoul government to come up with a set of measures to rein in rapidly growing mortgages.

The government ran a 40 trillion-won program in March last year to help borrowers convert their short-term floating-rate mortgages into long-term fixed rate ones to prepare borrowers for a potential rate hike.

Starting from February, banks also will be required to issue mortgage loans only after assessing a borrower's debt repayment ability -- their annual income -- rather than the value of collateral alone.

South Korea's household credit, including loans from banks and non-bank institutions, topped 1,160 trillion won ($966.5 billion) at the end of September last year, fueled by the government-led property market boosting measures and a low interest rate trend. (Yonhap)