Household loans extended by banks in South Korea rose by the sharpest in over two years in August on increased demand for home-backed loans amid high borrowing costs, data showed Wednesday.

Banks’ outstanding household loans had come to 1,075 trillion won (US$808.9 billion) as of end-August, up 6.9 trillion won from a month earlier, according to the data from the Bank of Korea (BOK).

The August gain is the largest since July 2021, when such loans rose 9.7 trillion won.

The August tally also marks the fifth consecutive month of an on-month rise following a 5.9 trillion-won gain in July, 5.8 trillion-won rise in June, 4.2 trillion-won increase in May and a 2.3 trillion-won gain in April.

Banks’ home-backed loans rose 7 trillion won on-month to 827.8 trillion won in August, while unsecured and other types of loans fell 0.1 trillion won to 246 trillion won over the cited period, according to the data.

Borrowing costs in Asia’s fourth-largest economy remain high following the BOK’s aggressive monetary tightening aimed at bringing surging inflation under control.

Last month, the BOK kept its benchmark rate unchanged at 3.5 percent, the fifth straight month of a rate freeze in the face of a murky growth outlook and moderating inflation.

The rate freezes came after the BOK had delivered seven consecutive hikes in borrowing costs since April last year.

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

Source: Yonhap News Agency