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S. Korean banks' mortgage lending soars in June

South Korean banks saw their mortgage lending jump by more than 9 trillion won (US$8.01 billion) in June from the previous month, data showed Sunday, due to sharply increased housing transactions.

As of end-June, the nation's seven major banks, including Kookmin, Shinhan, Woori and Hana, held 321.04 trillion won in outstanding mortgage loans, down from 330.9 trillion won a month earlier, according to the data by the lenders.

The actual amount, however, jumped by 9.3 trillion won last month, given the 19.2 trillion won worth of loans that were transferred to the state housing agency under a government-led loan program aimed at easing household debt risk.

In May, bank mortgage lending rose by 6.4 trillion won from the previous month.  

It marks the first time since 2010 that mortgage loans have increased by more than 6 trillion won for three straight months.

The on-month gain is also much bigger than that of the previous two years when the amount was usually less than 3 trillion won.

The rise in June mortgage lending was attributed to the unusually robust property trade in a period of low interest rates.

Apartment transactions in Seoul reached 11,115 cases in June, up 115 percent from a year earlier, according to industry data.

The surge in bank mortgage lending comes amid growing concern over the country's bulky household debt that continues to trend higher on low interest rates, which is feared to crimp consumption and possibly trigger a credit risk once interest rates begin to reverse course.

In June, the Bank of Korea slashed its benchmark interest rate to a record low of 1.5 percent in a bid to jump-start the sputtering economy.

Household debt reached 1,040.4 trillion won as of end-March, up 12.8 trillion won from the end of last year, according to central bank data. (Yonhap)