Household lending rates in S. Korea fall to record low

Bank lending rates for households in South Korea fell to the lowest last month after the Bank of Korea (BOK) cut its benchmark interest rate to a record low in the previous month, BOK data showed on Friday.

Rates for fresh bank loans to households averaged an annualized rate of 2.96 percent in July, down 0.1 percentage point from a month earlier. It was the fourth consecutive month of decline since April.

The July figure was the lowest as the BOK lowered its policy rate by 25 basis points in June to an all-time low of 1.25 percent.

Lower borrowing costs boosted worries about the country's already massive household debts that kept a record-breaking trend through June.

South Korea's household credit, the broadest measure of household debts, reached a new record high of 1,257.3 trillion won (1.13 trillion U.S. dollars) as of end-June, up 54.2 trillion won from six months ago.

Mortgage loan rates declined 0.11 percentage points from a month earlier to 2.66 percent in July, surpassing the previous record low for two straight months.

Lending rates for big corporations rose 0.02 percentage points to 3.08 percent last month, but the rate for small companies slumped 0.11 percentage points to 3.53 percent. Endit