Seoul: South Korean banks are expected to somewhat tighten their criteria on extending loans to households and companies in the second quarter of 2025, a survey by the central bank showed Tuesday. The index gauging banks' attitude toward lending stood at minus 6 for the April-June period, compared with 7 for the previous quarter, according to the poll of 203 financial institutions, including 18 banks, conducted by the Bank of Korea (BOK). A reading below zero means that a majority of lenders will tighten lending standards.

According to Yonhap News Agency, credit risks for borrowers will likely remain high in the second quarter due mainly to still-high household debts and economic uncertainties, the poll showed. Major lenders have tightened lending rules since the second half of 2024 as financial authorities have pressed them to do so to rein in surging household lending and rising housing prices in Seoul and some of its surrounding regions.

Household loans extended by South Korean banks rose for the second consecutive month in March amid rising housing prices in the affluent districts of southern Seoul following state deregulatory moves. Banks' outstanding household loans rose by 1.4 trillion won (US$985 million) last month from a month earlier, according to the BOK. The rate of growth slowed from a 3.2 trillion-won surge in February. March's increase came as banks eased some regulations at the beginning of the year, while demand for loans grew during the moving season.