Tag Archives: South Korea Property Market

South Korean mortgage lending to households across the financial sector grew at a slower pace last month as a result of tight loan control efforts, Yonhap reported yesterday, easing pressure for an early rate hike.

The state-run news agency reported that data from the Financial Supervisory Service (FSS) showed non-bank financial firms increased their combined mortgage lending by 1.1 trillion won (S$1.3 billion) last month, less than the 1.3 trillion won gain in September. Banks’ mortgage lending growth slowed for a fourth consecutive month, with the loan increase easing to 2.1 trillion won in October from 2.4 trillion won in September and significantly from 3.8 trillion won seen in June, the FSS said. The nation’s financial authorities have stepped up their loan control measures since early July to temper a growing property market bubble, a concern that the central bank clearly warned might force it to raise rates.

Source : Business Times – 5 Nov 2009

Its central bank may break ranks with G-20 partners and raise interest rates

Would-be home owner Hwang Min-soon is the sort of bullish property buyer who may prompt the central bank to break ranks with the G-20 and raise interest rates.

She is considering the purchase of a 104 square metre apartment in Seoul, where property prices have defied the global financial crisis to rise 20 per cent since the start of the year. When asked the sort of return she expected on her investment, Ms Hwang replied: ‘In the next two to three years, I’d say 70 to 80 million won (S$84,000 to S$96,000).’ That would be in the order of 30 per cent.

Property prices in South Korea are rising rapidly and, since urban South Koreans show no sign of losing their voracious appetite for property, so, more worryingly, are mortgages.

The central bank slashed its interest rates to a record low of 2 per cent to support the economy during the crisis. But it is now highlighting the property binge as reason enough to start raising them, even if that means breaking ranks with its G-20 partners, who have pledged to keep stimulus measures in place. Financial regulators are also ready to impose more controls on home loans. Continue reading →