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S.Korea's mortgage rates stay at record-low level amid rising household debts

Xinhua, September 25, 2015 Adjust font size:

Mortgage loan rates in South Korea hovered near the record-low level, propping up concerns that the low interest rates would boost household debts further, central bank data showed Friday.

Rates on fresh home-backed loans, extended by banks, averaged at an annualized rate of 2.94 percent in August, down 0.02 percentage points from a month earlier, according to the Bank of Korea (BOK).

The average mortgage loan rates declined to 2.81 percent in April, before gaining above 3 percent. It fell below 2 percent again from July.

The low rates came after the BOK lowered its policy rate by 25 basis points in March and June each to an all-time low of 1.5 percent.

Helped by the record-low rates, household debts by banks and non-bank deposit takers surged 9.5 trillion won (8 billion U.S. dollars) in July from the previous month.

The amount marked the third-biggest monthly growth, following the increases of 10.1 trillion won in June and 9.9 trillion won in April, respectively.

The country's real estate market showed recovering signs. Apartment transactions in Seoul and its suburban areas came to 12, 100 in July, tripling the monthly average of 4,600 tallied in July between 2006 and 2014.

The annualized rate for household loans, including mortgage loans and other credit loans, averaged 3.1 percent in July, down 0. 04 percentage points from the prior month. Endi