South Korean banks' consumer loans rise 2.3% in July

People scrambled to buy apartments before prices rose too high.

South Korean banks’ consumer loans surged for the second consecutive month in July amidst soaring housing costs, reports Yonhap News Agency, based on industry data.

Outstanding unsecured loans to individuals by five major lenders—KB Kookmin, Shinhan, Hana, Woori and NH Nonghyup—totaled US$101b (KRW120.2t), up 2.3% or $2.26b (KRW2.7t) from June.

The surge follows the largest-ever monthly increase of $2.35b (KRW2.8t) in June.

July's spike was attributed to surging home prices that prompted people to borrow from banks to buy apartments before prices rise further down the road.

Home-backed loans extended by local banks increased by $1.17b (KRW1.4t) in July compared to the previous month.

Apartment prices in South Korea have been soaring despite a series of government measures to keep them in check. According to the Korea Appraisal Board, apartment prices in Seoul rose 1.12% in July from the prior month, the biggest on-month gain in seven months.

Bank credit loans to individuals first skyrocketed in March during the height of the coronavirus crisis.

Further, the recent bullish stock market has sent retail investors taking out bank loans to invest, contributing partly to July's surge in credit loans, according to analysts.

Also responsible was the coronavirus outbreak that forced jobless people to borrow money from banks, they added.

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