Seoul: The increase in household loans extended by major banks in South Korea slowed for the second consecutive month in August following the introduction of a series of policy measures aimed at curbing home price hikes and household debts, industry data showed Monday. Outstanding household loans extended by five major commercial banks, including KB Kookmin Bank, Shinhan Bank, and Hana Bank, stood at 762.89 trillion won (US$547.9 billion) as of end-August, up 3.93 trillion won from a month ago.

According to Yonhap News Agency, the August tally marks a deceleration from a 4.14 trillion won gain the previous month and a 6.75 trillion won on-month increase in June. The banks' mortgage loans increased 3.7 trillion won last month, slowing from the previous month's 4.55 trillion won and the 5.76 trillion won gain in June, according to the data.

Since the start of July, mortgage loans to purchase homes in the capital region have been capped at 600 million won, an unprecedented move aimed at reining in recent spikes in housing prices in Seoul and its surrounding areas, including Gyeonggi Province. Tighter debt-to-service ratio (DSR) rules have also been applied to virtually all kinds of household debts since early July, while the stress interest rate has been raised to 1.5 percent from 0.75 percent on loans extended in the greater Seoul area.

Banks had eased some of their lending regulations at the beginning of the year, while demand for loans went up in the season for moving. The Seoul municipal government had also lifted part of the so-called land transaction permission zones imposed in some areas of Seoul's Gangnam, Seocho, and Songpa in February, leading to a marked increase in real estate prices in such areas, which, in turn, had fueled household loans.