South Korean banks are expected to raise the threshold on loans as they project increased household debt risks in the fourth quarter.

According to a Bank of Korea(BOK) survey on Monday, the credit risk index for the fourth quarter predicted by local banks was 20, ten points higher than the third quarter.

The index ranges from 100 to minus 100, and a positive rating indicates there are more banks that believe credit risks will rise.

A BOK official said that banks predict credit risks related to households and small firms will continue to rise in the year's remaining months due to the prolonged effects of the pandemic.

Another index measuring banks' attitude toward loans has reached minus 12. Though only slightly higher than the previous quarter, the figure still means banks will maintain a tight grip on lending.

A BOK official said the trend is affected by moves by authorities to tighten regulations on household loans.