S.Korea's household loans reduce on sluggish property market

SEOUL, Feb. 13 (Xinhua) -- Household loans in South Korea reduced for the first time in four months as the end of temporary tax benefits pulled down housing transactions, central bank data showed Wednesday.

Outstanding household loans extended by banks were 463.1 trillion won (426 billion U.S. dollars) as of the end of January, down 3.5 trillion won from a month earlier, according to the Bank of Korea (BOK). The figure fell after rising for three months through December last year.

Housing transactions declined after tax cut benefits for home trading expired in December. Apartment sales and purchases in Seoul fell to 1,200 in January after rising to 6,900 in the previous month.

Mortgage loans decreased 2.3 trillion won in January to 314.7 trillion won. Even after including the conforming loans, the home- backed loans rose by 0.4 trillion won after jumping 5.7 trillion won in December.

Conforming loans are those extended by depository corporations that can be transferred to the state-run Korea Housing Finance Corp. (KHFC). The agency buys the loans from banks to securitize them as mortgage-backed securities (MBS). The securitization is viewed as a positive factor to boost long-term, fixed-rate mortgage loans.

Credit loans extended by banks reduced 1.2 trillion won in December from the previous month as year-end bonus payments weakened demand for such loans.

As of end-January, corporate loans by banks were 593.7 trillion won, up 4.7 trillion won from a month before. The gain came as local lenders raised lending to small- and medium-sized enterprises (SMEs), which rose 3.1 trillion won last month.

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