banks-household loans

Banks' household loans shrink for 2nd straight month in Feb. amid high borrowing costs

SEOUL, March 9 (Yonhap) -- Household loans extended by banks in South Korea continued to shrink for the second straight month in February amid high borrowing costs caused by the central bank's monetary tightening to fight inflation, data showed Thursday.

Banks' outstanding household loans stood at 1,050.7 trillion won (US$797.8 billion) as of end-February, down 2.7 trillion won from a month earlier, according to the data from the Bank of Korea (BOK).

This marked the second straight month of an on-month shrinkage following a 4.7 trillion-won contraction in January, the sharpest monthly decline since relevant data started to be compiled in January 2004.

Borrowing costs remain high in line with the BOK's aggressive monetary tightening aimed at bringing inflation under control. The central bank has hiked its policy rate by a combined 3 percentage points since August 2021.

Last year, outstanding household loans slipped for the first time in 18 years.

In February, banks' home-backed loans shrank 300 billion won on-month to 798.6 trillion won, while unsecured and other types of loans declined 2.4 trillion won over the same period to 250.8 trillion won.

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