South Korea’s household loans extended by local financial institutions increased by 8.8 trillion won ($7.8 billion) in August from a month ago as gains in non-mortgage-backed loans including credit loans have accelerated after the launch of Internet-only Kakao Bank, data showed on Tuesday.

According to Financial Services Commission and Bank of Korea on Tuesday, loans extended by both banks and non-banks grew by 8.8 trillion won in August from a month ago, outpacing this year’s monthly average gain of 7.3 trillion won. The increase, however, slowed down from 14.3 trillion won in the same month last year and 9.5 trillion won in July.

Data showed that outstanding household loans from banks came to 744.2 trillion won as of the end of August, up 6.5 trillion won from the previous month.

The surge in mortgage-backed loans slowed down after the government last month introduced a fresh set of tougher measures to cool the sizzling property market, a main driver for the country’s snowballing households’ debts. Outstanding mortgage-backed loans in the end of August reached 557.7 trillion won, up 3.1 trillion won from the previous month. The increase is down 1.7 trillion won from the 4.8 trillion won on-month gain in July and almost half of the 6.1 trillion won gain in August last year.

Outstanding household loans excluding mortgage-backed loans, however, came to 185.7 trillion won in the end of July, expanding 3.4 trillion won from the previous month, the biggest on-month gain since the central bank started piling related data in January 2008. In July, it added 1.9 trillion won on month.

Of non-mortgage-backed loans, credit loans from financial institutions increased 3 trillion won from a month ago, expanding from 1.1 trillion won gain in the previous month. Non-mortgage-backed loans include credit loans and commercial property-backed loans, deposit and installment savings-backed loans, and equity-backed loans.

The central bank said non-mortgage loans, particularly credit loans, have rapidly grown on a rise in consumer spending during the summer holiday season and a slew of launches of new interest-rate friendly products by banks who have rolled their sleeves to ward off the country’s second internet-only Kakao Bank that has succeeded in taking away credit loan customers from traditional bricks and mortar banks since its operation began in July.

Household loans extended by the non-commercial bank sector, meanwhile, increased by 2.3 trillion won, softening from this year’s monthly average increase of 2.7 trillion won.

By Lee Seung-yoon

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