Korea’s household loans from non-banking sector up $722 mn in Oct.

(Gettyimagesbank)

South Korea saw household loans from the non-banking sector increase by 1 trillion won ($722 million) in October, despite financial authorities’ efforts to curb snowballing debt.

According to the Korean government on Tuesday, household loans from non-banking institutions rose by more than 1 trillion won as of that day, surpassing the monthly Maginot Line.

The growth is expected to be the highest in more than two years after 1.4 trillion won increase in May 2022.

Household loan growth slowed to 5.2 trillion won in September after a growth of 9.7 trillion won in August, following the second phase of the government‘s policy for debt service ratio (DSR) limits.

In particular, loans from banks fell by 3.5 trillion won, and the non-banking sector, including insurers, declined by 1 trillion won.

This month, however, has seen a stronger demand among household borrowers toward the non-banking sector in which lending standards are relatively lax.

The Financial Services Commission recently issued direct warnings to insurance companies and the Korean Federation of Community Credit Cooperatives that had increased lending last month.