Household loans extended by the country’s five major banks rose by the most on record last month despite warnings from the financial regulators and a series of rate hikes, industry sources said Monday.

According to the sources, KB Kookmin, Woori and three others extended a combined 9.62 trillion won (US$7.19 billion) last month, the sharpest-ever increase.

Mortgage loans extended by them also climbed by the most on record at 8.91 trillion won last month, according to the sources.

When loans from other financial institutions are included, the tally may top 10 trillion won.

Banks started tightening curbs on mortgage loans this month amid concerns over rising housing prices in Seoul and household debts.

The move came as the Financial Services Commission asked banks to toughen screenings for new mortgage borrowers and only allow them to take out smaller loans than before under the tightened criteria.

The stress debt service ratio, which measures how much a borrower has to pay for principal and interest in
proportion to his or her yearly income, serves as a ceiling on aggregate lending.

The tougher rules had been originally applied to banks in July but were delayed by two months.

Household credit rebounded sharply in the second quarter of this year as home-backed loans increased in the face of tightened lending criteria and high rates.

Outstanding household credit reached 1,896.2 trillion won at the end of June, up 13.8 trillion won from three months earlier, according to the preliminary data from the Bank of Korea.

The second quarter marks a rebound from the previous quarter’s 3.1 trillion-won fall, according to the data.

Source: Yonhap News Agency