Seoul, Nov 13 (IANS) Despite tighter lending regulations, household loans extended by South Korean banks grew at a faster clip in October on increased loans for investment amid a strong stock market, central bank data showed on Thursday.

Banks’ outstanding household loans stood at 1,173.7 trillion won (US$798.9 billion) as of end-October, up 3.5 trillion won from a month earlier, according to the data from the Bank of Korea (BOK).

It marks an acceleration from a 1.9 trillion-won gain seen the previous month, reports Yonhap news agency.

Home-backed loans increased 2.1 trillion won from a month earlier to 934.8 trillion won as of end-October, slowing from a 3.9 trillion-won rise the previous month, while unsecured and other types of household loans went up by 1.4 trillion won to 238 trillion won.

“The slower mortgage growth came as demand for jeonse loans declined and the housing transactions slowed down in July and August amid regulations,” a BOK official said.

“But credit and other loans increased due mainly to rising investment in domestic and overseas stocks, a surge in preemptive home purchases ahead of the Oct. 15 measures on the housing market and increased funding demand during the extended Chuseok holiday,” he added.

There has been a growing trend of investors taking out loans to invest in stocks amid a market rally. The benchmark Korea Composite Stock Price Index (KOSPI) has surged about 70 percent so far this year, driven by government-led market reform measures and optimism surrounding the artificial intelligence (AI) boom.

During a meeting with reporters on Wednesday, Financial Services Commission (FSC) Chairman Lee Eok-won emphasized the importance of risk management, while noting that the recent increase in credit loans does not appear to have fueled overall household debt growth or pose a threat to financial stability.

The data also showed that corporate loans went up by 5.9 trillion won from a month earlier in October, also picking up the pace from a 5.3 trillion-won increase a month earlier.

Outstanding corporate loans stood at 1,366 trillion won as of end-October.

Policymakers are closely monitoring the property market and household debt trends, as apartment transactions in Seoul rebounded to around 86,000 in September from about 41,000 in both July and August.

In a bid to cool an overheated housing market and curb soaring household debt, the government unveiled a new set of measures last month, which added 21 more districts in Seoul to the list of speculative zones, bringing all 25 districts in the capital under tougher regulations.

The government also tightened lending rules, lowering the mortgage loan cap to as little as 200 million won.

—IANS

na/