Seoul: Household loans extended by South Korean banks grew at a slower pace in November amid tightened lending regulations aimed at cooling the overheated property market in the capital region, central bank data showed Wednesday.

According to Yonhap News Agency, banks' outstanding household loans stood at 1,175.6 trillion won (US$799.62 billion) as of end-November, marking an increase of 1.9 trillion won from the previous month. This growth rate reflects a slowdown compared to the 3.5 trillion-won increase recorded in October.

Home-backed loans experienced a modest rise of 700 billion won on-month to 935.5 trillion won, a decrease from the 2 trillion-won gain seen in October. Unsecured and other types of household loans also saw a rise, climbing 1.2 trillion won to 239.2 trillion won in November, which is slightly down from a 1.4 trillion-won increase a month earlier.

A Bank of Korea (BOK) official commented, "Mortgage loans grew at a slower clip despite the increase in housing transactions prior to the Oct. 15 measures, as banks continued to tighten household lending and demand for jeonse loans declined." The tightened rules, introduced in mid-October, saw the government designate 21 more districts in Seoul as speculative zones, subjecting all 25 districts in the capital to stricter regulations. Additionally, lending limits were tightened, capping mortgage loans at as little as 200 million won.

Jeonse, a unique housing rental system in South Korea, involves tenants making a large lump-sum deposit that is fully returned at the end of the lease. The BOK official also noted, "Other household loans continued to increase markedly amid an expansion in both domestic and overseas stock investments."

The benchmark Korea Composite Stock Price Index (KOSPI) has surged nearly 70 percent so far this year, fueled by the semiconductor market upcycle, optimism over the artificial intelligence (AI) boom, and government-led market reform measures.

The data further revealed that corporate loans increased by 6.2 trillion won on-month in November, up from a 5.9 trillion-won rise the previous month. The total outstanding corporate loans reached 1,372.2 trillion won at the end of November, as reported by the BOK.