Household loans issued by five major local banks increased by more than two-point-four trillion won in October from a month earlier, prompting hikes in lending interest rates.

According to sources in the banking industry on Sunday, the combined outstanding loans extended to households by five major lenders – KB Kookmin, Shinhan, Hana, Woori and NH Nonghyup – came to 684-point-eight trillion won as of October 26, up two-point-47 trillion won from the end of last month.

It marks the largest monthly gain in two years since October 2021, when it increased by three-point-43 trillion won.

Housing mortgage loans rose by two-point-25 trillion won, and credit loans also increased by 530 billion won in October after decreasing by more than one trillion won the previous month.

With the rapid rise in household loans, local banks are increasing interest rates on loans. Shinan Bank recently decided to slightly raise its interest rates on some of its household loan products starting Wednesday.

KB Kookmin already raised its interest rates by up to zero-point-three percentage points on October 11 on mortgage loans and loan products for jeonse, a unique rental system in South Korea in which a tenant gives the landlord a large fixed-sum deposit. Woori Bank also followed suit on October 13.