S.Korea’s March bank lending grows at record pace

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SEOUL (Reuters) – Bank loans to South Korean households in March jumped by the most on record, central bank data showed on Wednesday, as credit loans for stock investments and home sales outside Seoul surged after the government rolled out fresh property regulations.

Household loans owed to banks increased a net 9.6 trillion won ($7.87 billion) during March, the biggest monthly jump since data compilation began in 2004, and higher than the 9.3 trillion won recorded in February.

Mortgage lending rose a net 6.3 trillion won last month, slower than a net 7.8 trillion won in February, as housing measures unveiled in December have partially shown effect in pulling down the demand for Seoul apartments, Bank of Korea data showed.

Fast growth in property prices has frequently kept the central bank from lowering the interest rates further, even when Asia’s fourth-largest economy was rattled by the global trade war and the coronavirus pandemic.

The bank delivered an emergency 50 basis points cut in Mid-March to shore up economic growth and demand, and had cut rates in July and October last year.

Other modes of lending, which include credit loans, increased a net 3.3 trillion won in March, doubling the pace of 1.5 trillion won in the prior month and the fastest growth since October 2018, on higher demand for equity investments and housing funds.

“Most funds for investors’ stock purchase and sales are likely to have been financed by credit loans … the demand for equity investment funds has increased noticeably in March,” a BOK official told Reuters, though adding that the central bank does not have detailed figures on how much was used for stock trading.

Reporting by Joori Roh; Editing by Sherry Jacob-Phillips

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