SEOUL- South Korea’s household borrowing surged to a record high in June and by the biggest amount in 21 months, central bank data showed on Wednesday, as demand grew for mortgage loans.
Total household borrowing from banks grew by 5.9 trillion won ($4.56 billion) to a record 1,062.3 trillion won at the end of the month, according to the Bank of Korea.
It was the third monthly rise after increases of 4.2 trillion won and 2.3 trillion won in May and April, respectively, and the biggest since September 2021.
“It is too early to say whether the pace is too fast,” a central bank official said during a media briefing, adding that the trend would have to be watched further to make an assessment.
Mortgage loans jumped by 7.0 trillion won compared with 4.2 trillion won the previous month. That was the biggest increase since February 2020.
South Korea’s heavily trade-reliant economy barely averted a recession posting slim growth in the first quarter, but the outlook remained clouded by weak exports due to a cooling global economy, even with China’s reopening.
South Korea’s gross domestic product (GDP) in the first quarter expanded by 0.3 percent over the previous three-month period compared with a median 0.2 percent rise tipped in a Reuters survey.
The biggest contributor to GDP during the first quarter was private consumption, posting growth of 0.5 percent, while capital investment dented economic growth, dropping 4.0 percent. Exports rose 3.8 percent, while imports grew 3.5 percent.
The Bank of Korea said earlier that this year’s economic growth would be weaker than its earlier projection of 1.6 percent, as the central bank left interest rates steady for the second consecutive meeting in a row.
Economists now expect the Bank of Korea not to hike interest rates further after having raised them by 300 basis points since late 2021.
