Household loans in South Korea reduced for the first time in four months as demand for mortgage loans weakened after the end of temporary tax cuts for property transactions, central bank data showed Tuesday.
Household loans extended by deposit-taking lenders were 656.2 trillion won (599.27 billion U.S. dollars) as of the end of January, down 3.6 trillion won from a month earlier, according to the Bank of Korea (BOK). It was the first fall since September 2012.
The decline came after temporary tax cuts for property transactions expired at the end of 2012, which reduced demand for home-backed loans by 2.4 trillion won in January.
Credit loans by deposit-takers fell 1.2 trillion won as bonus payoffs weakened demand for such loans.
After including conforming loans, mortgage loans by banks rose by 0.5 trillion won in January. Conforming loans are those extended by banks and other deposit-taking lenders that were transferred to the Korea Housing Finance Corp. (KHFC).
The state-run agency buys home-backed loans from the lenders to securitize them as mortgage-backed securities (MBS). The securitization is viewed as a positive factor to boost long-term, fixed-rate mortgage loans.