The growth pace of household loans slowed in September amid fresh loan tightening measures and the extended holiday period, data showed Sunday.

As of last Thursday, the accumulative household loan balance at the five major banks — KB Kookmin Bank, Shinhan Bank, Hana Bank, Woori Bank, and NongHyup Bank — totaled 728.9 trillion won ($545.6 billion), reflecting a marginal increase of 2.72 trillion won since the end of August.

At the current pace, the monthly increase for September is expected to reach around 4.1 trillion won, which is less than half the rise recorded in August and similar to the increase seen in April.

Mortgage loans, the primary driver of household loan growth, rose by 2.65 trillion won as of last Thursday. If this trend continues, the total gain for September is projected to reach around 4 trillion won, or 45 percent of the increase seen in August.

Market observers attributed the slowdown to the extended Chuseok holiday and tightened government restrictions on home loans, as well as banks’ measures to curb loans for home purchases in the greater Seoul area.

"While direct comparison is difficult due to the holiday effect, there is definitely a noticeable difference compared to last month when mortgage loans were issued at record levels and speed," one market observer noted.

This trend has led to speculation that South Korea's central bank might adjust its monetary policy by lowering borrowing costs as early as next month, following a similar move by the US Federal Reserve.

"With increasing pressure to lower rates due to weak domestic consumption and sluggish private spending, if housing prices and household loan indicators improve even slightly, there may be no reason for the central bank to delay a pivot any further," a financial market expert said. (Yonhap)