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S.Korean banks to tighten standard for mortgage loans in Q3
Last Updated: 2018-07-06 14:50 | Xinhua
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South Korean banks would tighten standard for mortgage loans in the third quarter amid the expected interest rate hike later this year, central bank data showed Thursday.

According to a Bank of Korea (BOK) survey, the lending attitude index for local financial institutions stood at 6 for the July-September quarter, rising above zero for the first time in three years. The result was based on a poll of 199 officials in charge of lending in financial institutions.

The index for household loans came in at 7, with the number for loans to small companies standing at 13.

Banks have tightened loan standard for households as people rushed to purchase new home with borrowed money amid the record-low interest rate.

Household debts continued a record-breaking trend, prompting the government to announce measures last year to control speculative investment in the real estate market.

The BOK refrained from altering its target rate of 1.5 percent since the bank raised it to the current level in November last year. The U.S. Federal Reserve lifted its benchmark rate in June to a range of 1.75-2.00 percent, widening a gap with the BOK's policy rate.

Amid the rising expectations for the BOK's rate increase in the near future, market rates went higher and the lending rate picked up. It increased credit risk for household debts.

The credit risk index for the third quarter stood at 30, the highest in 23 quarters since the fourth quarter of 2012.

The number for household debts rose to 33 for the third quarter, the highest in 15 years.

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