South Korea’s bank lending to households rose to a record in March as people took out more mortgage loans to buy homes. Lending to households increased by 1.7 trillion won ($1.6 billion) last month to 434.1 trillion won after a revised gain of 2.2 trillion won in February, the Bank of Korea said in an e- mailed statement today.
South Korea’s swelling household debt may add to the Bank of Korea’s concern about inflationary pressure as consumer prices rose 4.7 percent in March, the fastest gain in 29 months. Even so, the central bank may keep interest rates unchanged at 3 percent tomorrow as officials watch how rising oil prices, Japan’s disaster and European debt woes affect the economy.
Eleven of 12 economists surveyed by Bloomberg News predicted the bank will keep the policy rate on hold after boosting it by a quarter of percentage point each in January and March. The decision will be announced around 9:30 a.m. in Seoul.
Governor Kim Choong Soo said last month that the central bank’s biggest concern in making policy decisions is inflation. Mortgage lending rose 2.1 trillion won to 289.9 trillion won, today’s report showed. Loans to companies increased 2.8 trillion won to 529.7 trillion won.
The broadest measure of money supply, M2, gained 5 percent in February from a year earlier, according to a separate central bank statement. The gauge rose 6.5 percent in January.
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