Loans extended by South Korea’s non-bank lenders as of June hit a record high of 763.69 trillion won ($669.6 billion) on a sharp rise in borrowing for housing purchases and living expenses.

According to the Bank of Korea on Monday, outstanding loans extended by non-bank lenders including mutual savings banks, credit unions and insurance companies, came to 763.69 trillion won as of the end of June, up 5.4 percent, or 39.1 trillion won, from the end of last year. It marks the highest non-bank lending since the central bank started compiling related data in 1993.

The gain accelerated from a year ago when the figure added 34.89 trillion won in the January-June period of 2016. It is also the second-highest six-month increase following the 52.87 trillion won addition in the second half of last year.

The increase in alternative loans came after the sharp rise in demand for mortgage-backed loans on the booming property market in the Seoul area as well as for loans to secure business funds and living expenses. The market observers think such a fast pace of growth is worriesome as loans from alternative sectors have higher interest rates and are mainly sought by financially-vulnerable groups including low-income households and individual businesses with low credit rating.

By financial institution, asset managers extended 60.4 trillion won worth of loans in the January-June period, up 22.4 percent, or 11.06 trillion won, from the end of last year, while savings banks lent 47.3 trillion won, up 8.7 percent, or 3.8 trillion won, over the same period. National Credit Union Federation of Korea extended 7.7 percent more loans in the first six months of this year while mutual savings banks 5.9 percent, and Korean Federation of Community Credit Cooperatives, 7.9 percent.

By Lee Seung-yoon

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