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outh Korean banks extended household loans worth over 4 trillion won ($2.87 billion) in August, a significant increase from the previous month despite government efforts to curb rising household debt and housing prices. The surge in lending was largely driven by unsecured and other types of household loans, which saw a notable uptick.

    The government had imposed restrictions earlier this year, including a 600 million-won cap on mortgage loans for property purchases in the capital region, as well as suspending home-backed loans for multi-homeowners. While these measures have eased market overheating to some extent, authorities are considering additional regulations, such as tightening the loan-to-value ratio.

    The LTV ratio is currently set at 50 percent for anti-speculation areas in Seoul, but market watchers expect a tighter 40 percent ceiling. Meanwhile, net interest margins among South Korea's top five banks have approached their highest levels since 2022, driven by the banks' reluctance to lower lending rates amid government control of household debt.

    Deposit rates, on the other hand, have fallen to their lowest levels in over three years. KB Kookmin Bank saw a 0.1 percentage point increase in net interest margin from July, followed by Nonghyup Bank with a 0.07 percentage point gain and Hana Bank with a 0.04 percentage point on-month rise.