Seoul: Household loans provided by banks in South Korea experienced their fastest growth in almost two years during May, driven by increased lending tied to stock market investments, recent data indicated.

According to Yonhap News Agency, the Bank of Korea (BOK) reported that outstanding household loans by banks surged by 6.9 trillion won (approximately US$4.5 billion) to reach 1,181.8 trillion won last month. This marks an acceleration from the previous month's increase of 2.1 trillion won and represents the most significant month-on-month growth since August 2024, when household loans saw a rise of 9.2 trillion won.

In detail, mortgage loans rose by 3.2 trillion won in May, compared to a 2.7 trillion-won increase in April. Additionally, unsecured and other household loans climbed by 3.7 trillion won following a 600 billion-won decrease in the previous month. This represents the most substantial increase since April 2021, when such loans expanded by 11.8 trillion won.

The BOK attributed the rise in non-mortgage loans to growing individual investments in the flourishing stock market. The Korea Composite Stock Price Index (KOSPI) experienced a rally in May, propelled by strong performances in semiconductor stocks, climbing to the 8,400-point level from 6,500. This surge was primarily driven by individual investors, as foreign investors turned into net sellers starting May 7, engaging in profit-taking and portfolio rebalancing activities.

Meanwhile, corporate loans increased by 10.6 trillion won from the previous month in May, following a 10.7 trillion-won rise in April. As of the end of May, outstanding corporate loans amounted to 1,408.3 trillion won, according to the latest data.