SEOUL: South Korea’s household debt growth hit the highest in two years for the fourth quarter of last year amid the record-low borrowing cost, central bank data showed Tuesday.
Household credit, which includes debts owed by households to financial institutions as well as purchase on credit, reached 1,600.1 trillion won (1.3 trillion U.S. dollars) as of the end of December, up 27.6 trillion won (22.8 billion U.S. dollars), or 1.8 percent, from three months earlier, according to the Bank of Korea (BOK), reports Xinhua.It was the fastest increase since the fourth quarter of 2017. The household credit rose 0.2 percent in the first quarter, 1.1 percent in the second quarter and 1.0 percent in the third quarter respectively.
The faster expansion in the fourth quarter came after the BOK lowered its benchmark interest rate to a record low of 1.25 percent in October last year. The policy rate was cut from 1.75 percent to 1.50 percent last July.
During the October-December quarter, mortgage loan increased 12.6 trillion won (10.4 billion U.S. dollars), after growing 9.5 trillion won (7.8 billion U.S. dollars) in the previous quarter.