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S. Korea's household debts post largest growth in Q3

Xinhua, December 23, 2015 Adjust font size:

Household debts in South Korea posted the biggest quarterly growth in at least seven years amid the record-low borrowing costs, central bank data showed Wednesday.

Debts owed by households and non-profit organizations to banks and other lenders, also including purchase on credit, amounted to 40.7 trillion won (34.7 billion U.S. dollars) during the July-September period, according to the Bank of Korea.

It marked the largest quarterly increase since the bank began compiling the data in 2008 in accordance with new global standards. The third-quarter increase was up from 36.9 trillion won in the second quarter.

The surging debts came as the central bank cut the benchmark interest rate by a quarter percentage point in March and June each to an all-time low of 1.5 percent.

Households increased loans to purchase homes and buy goods and services with borrowed money, propping up concerns over the worsening of debt-servicing capability after the first interest rate hike in about a decade in the United States.

The South Korean central bank is widely believed to keep its record-low interest rate at the current level for the time being, but will follow the Fed's suits sometime next year as the Fed's rate hike is expected to continue throughout next year. Enditem