South Korea household loans down in January to $405M

Household loans in South Korea went down to US$405 million in January from US$2.49 billion December due to sluggish housing market.

Lenders' household loans declined for the first time last month after posting consistent growth since February of 2011, according to data from the Bank of Korea.

The South Korean government and financial watchdog have been trying to put a lid on mounting household debts as heavy indebtedness is feared to squeeze private consumption, one of two growth engines of the domestic economy.

Although household loans usually dip in January from the previous month, the decline last month was "unusual" and was bigger than in previous years, the BOK said.

The latest drop in household loans was due to a slump in housing sales, which reduced demand for home-backed loans, the central bank said. A one-time factor, such as a tax break phaseout at the end of 2011, also diminished demand for new credits in January.

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Tags: household loans, South Korean banks, housing market, household debts