SEOUL, Feb. 27 (Xinhua) -- Burden among South Korean households to service debts increased on higher lending rates on expectations for the U.S. Federal Reserve's interest rate hike, central bank data showed on Monday.
Rates for household lending by banks stood at an annualized rate of 3.39 percent in January, up 0.10 percentage point from a month earlier, according to the Bank of Korea (BOK). It was the highest in almost two years.
The rates continued to rise for five months from 2.95 percent in August last year on growing expectations for the Fed's rate increases this year. Following a quarter percentage point hike in December, the Fed indicated three rate increases this year alone.
The country's household debts kept a record-breaking trend as the BOK cut its benchmark rate from 3.25 percent in July 2014 to an all-time low of 1.25 percent in June last year.
The government encouraged households to purchase new homes with borrowed money by easing regulations on mortgage financing.
Higher lending rates would put more pressures on households, which are already struggling with low income and high unemployment. Consumer spending is expected to fall further amid growing burden to repay debts.
Mortgage loan rates came to 3.16 percent in January, up 0.03 percentage points from the previous month. It was the sixth consecutive monthly increase, marking the highest in nearly two years.
Rates for corporate loans came in at 3.55 percent in January, slightly up from 3.54 percent in the previous month.
The rate for loans to big corporations increased 0.04 percentage points to 3.20 percent, with the figure for those to small companies rising 0.02 percentage points to 3.79 percent.
