Symptoms
The Bank of Korea announced on Nov. 24 that Korea’s tentative household credit balance as of the end of the third quarter of this year totaled 1.166 quadrillion won (US$ 1.016 trillion), showing a 3.0 percent increase from a quarter ago to reach a new high.
The amount of household loans increased 30.6 trillion won (US$26.8 billion) to 1.1026 quadrillion won (US$964.41 billion) between the second and third quarters, while the sales credit recorded an increase of 6.6 percent to 63.4 trillion won (US$). The former rose by 13.1 trillion won (US$11.5 billion) in the second quarter of 2014, 20.6 trillion won (US$18.1 billion) in the third, 26.1 trillion won (US$22.8 billion) in the fourth, 14.2 trillion won (US$12.4 billion) in the first quarter of this year, and 32.7 trillion won (US$28.6 billion) in the next quarter.
The continuation of such a rapid increase is attributable to mortgage loans snowballing in the banking sector. This type of loans deposit banks provided between July and September this year increased by 11.5 trillion won (US$10.1 billion) to 383.7 trillion won (US$335.5 billion). The increment amounts to 18.6 trillion won (US$18.6 billion) when the fixed-rate mortgage transfer to the Korea Housing Finance Corporation is taken into account. The total household loans provided by deposit banks increased by 14.3 trillion won (US$12.5 billion) to 541.5 trillion won (US$473.5 billion) during the same period.