(Bloomberg) -- South Korea’s household debt grew the most in three years last quarter, highlighting a development that kept the central bank from pivoting on policy until last month.
Total household credit rose by 18 trillion won ($12.9 billion) in the July-September period compared with the previous quarter, according to data released Tuesday by the Bank of Korea. Mortgage loans, a major component of the credit, also rose by the most since the third quarter of 2021.
The rise in private loans came amid a hotter-than-expected increase in housing prices in Seoul and its surrounding area around the same period, a development that had raised concerns among BOK members that a pivot could add more fuel to the real estate market and exacerbate financial imbalance.
Still, the bank finally began its policy pivot in October with a quarter-point cut to its benchmark interest rate, and is widely expected to hold it unchanged at 3.25% when the board convenes next week. Apartment prices in Seoul slipped for the first time in nine months in September.
Economic uncertainties following the US election and lackluster private consumption are increasingly top-of-mind for board members as consumer inflation cools below the BOK target and home prices show some signs of stability.
In a meeting with reporters Tuesday, board member Kim Jong Hwa noted government measures aimed at reining in home prices. He said that the BOK would likely include its latest assessment of the property market when it meets next week.
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