S.Korea's bank household loans grow most in eight years

Household loans extended by South Korean banks grew the most in at least eight years amid record-low interest rate, financial watchdog data showed Monday.

Debts owed by households to banks stood at 518.2 trillion won ( 470 billion U.S. dollars) as of end-December, up 39.2 trillion won from a year earlier, according to the Financial Supervisory Service (FSS).

It was the largest yearly increase since the financial watchdog began compiling the data in 2007.

In December alone, the household debts rose by 5 trillion won, keeping a trend of more than 5 trillion won gain for three straight months.

The fast increase came as the Bank of Korea (BOK) cut benchmark interest rate in August and October 2014 to a record low of 2 percent. The government also eased regulations on mortgage financing, prompting home-backed loans to increase last year.

Mortgage loans increased 37.3 trillion won from a year earlier to 364.1 trillion won at the end of December. When including loans securitized to mortgage-backed securities (MBS), the 2014 growth amounted to 406 trillion won.

Bank loans to big corporations rose 18.2 trillion won to 183.5 trillion won in 2014, with those for small companies rising 33.5 trillion won to 522.4 trillion won.

The rate of household loans overdue more than a month was 0.49 percent of the total as of end-December, down 0.14 percentage points from a year earlier. The rate for mortgage loans fell 0.17 percentage points to 0.41 percent.

Delinquency rate for corporate loans stood at 0.77 percent as of end-December, marking the lowest since the FSS began compiling the data in 2007. Endi