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S Korea banks seen tightening lending in 1Q2010

SEOUL: South Korean banks are expected to continue to rein in household lending in the first quarter in line with government efforts to control the property market, the central bank said on Jan 5.

In a Bank of Korea survey of 16 local banks' lending attitudes the index on household mortgage lending for the fourth quarter hit -13, unchanged from the fourth quarter of 2009 and compared with -19 in the third quarter.

An index reading below zero means that the number of banks planning to reduce lending outnumbers those willing to expand loans.

The index gauging demand for mortgage loans in the first quarter fell to 3 from the fourth quarter's 6 and the third quarter's 22, with strict state loan regulations weakening expectations for higher property prices.

The authorities have beefed up regulations on home-backed loans since July last year amid growing signs of a property market bubble spurred by months of record-low interest rates. -- Reuters
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