S. Korea's household loans up for seventh month in August

SEOUL, Oct. 13 (Yonhap) -- South Korean bank loans to households rose for a
seventh month in August mainly due to increased student loans and deficit
accounts, the central bank said Monday.
Outstanding household loans by local lenders stood at 503 trillion won (US$398
billion) as of the end of August, up 0.9 percent or 4.28 trillion won, from a
month earlier, according to the Bank of Korea (BOK).
The monthly growth of household loans accelerated from July when it climbed by
0.8 percent or 3.86 trillion won, the BOK said.
Household lending has been on the rise since January when it dropped slightly.
"A rise in student loans and deficit accounts contributed to lifting overall
household loans while the growth of home-backed loans slowed," said the central
bank.
Home-backed loans, which account for the bulk of total household lending, climbed
by 556 billion won to 251 trillion won while mortgage loans grew 1.76 trillion
won in July.
The data come as rising debts and high inflation are eating into the household
purchasing power, denting overall domestic demand. Consumer spending, one of the
main growth engines, dipped 0.2 percent in the April-June period from the
preceding three months, the first drop since 2004.
The BOK lowered its key interest rate by 0.25 percentage point in early October
in its first rate cut since 2004 November amid signs of domestic economic
slowdown.
Annual growth of producer prices, a barometer of future consumer inflation, still
remained above 10 percent at 11.3 percent in September although it slowed from a
12.3 percent gain the previous month.