South Korea imposed new lending controls yesterday to cool its housing market, but the move failed to dent expectations that the central bank will raise interest rates soon to avert a property price bubble.
Upbeat exports and consumer spending data for September added fuel to rate rise speculation, hitting government bonds and lifting the won, with some players not ruling out a move even as soon today when the Bank of Korea holds its policy review.
Bonds cut their losses slightly after the Financial Supervisory Service said that it would limit mortgage lending by insurance firms and other non-banking institutions in Seoul and the surrounding areas.
But traders doubted lending controls alone would succeed in stopping a relentless house price rise, which the central bank has said could force it to raise interest rates, and stuck to their view that rates would go up before the year-end. Property prices in Seoul have risen 20 per cent since the start of the year. Continue reading
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