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Wednesday November 8, 11:49 AMS.Korea home-backed loans to households jump in OctSEOUL, Nov 8 (Reuters) - Home-backed bank lending to South Korean households rose by the fastest pace in five months in October from September, data showed on Wednesday, adding to government worries about the red-hot housing market.The data comes amid speculation that rising housing prices may pressure the central bank to raise interest rates soon, if not at its next policy meeting on Thursday, reversing its earlier pledge to reconsider its tightening stance. The Bank of Korea data showed home-backed loans to households rose 1.32 percent in October from September, marking the biggest percentage gain since a 1.57 percent rise in May and pushing the overall bank loans to households up by 1.22 percent. Home-backed loans rose to 209.68 trillion won ($223.4 billion) at the end of October, equivalent to a quarter of the country's annual gross domestic product, from 206.94 trillion won a month before, the data showed. The sharp rise pushed overall bank loans to households to an outstanding 335.01 trillion won by the end of October from 330.99 trillion won a month earlier, which represented the fastest gain since a 1.37 percent rise in June. All 10 economists in a Reuters survey forecast the Bank of Korea would hold its overnight call rate target steady at 4.50 percent on Thursday, although there was no consensus about the future rate policy. [ID:nSEO294379] President Roh Moo-hyun vowed on Monday that his government would do whatever it can to calm the housing market, and one of his secretaries visited the central bank later that day, sparking speculation that interest rates may rise soon. Kim Soo-hyun, Roh's secretary for social policy, told Reuters he had visited the Bank of Korea for personal purposes and had no discussion at all about interest rate policy, which by law belongs solely to the central bank's monetary policy committee. Housing prices in October were on average 13.6 percent higher than a year earlier, data from top local lender Kookmin Bank showed last week. It compared with that month's annual inflation rate of 2.1 percent. The central bank has raised the overnight call rate target five times since October 2005 to rein in inflation and help calm then-rising housing prices, pushing the target to a five-year high of 4.50 percent by August. But after that fifth increase, the central bank said it was ready to reconsider its monetary policy stance in view of slowing economic growth and low consumer inflation. ($1=938.0 Won) |
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