Tighter lending restrictions at commercial banks are pushing more borrowers toward savings banks where interest rates are significantly higher, as the government continues its drive to rein in household debt, according to industry officials Wednesday.

Annual interest rates on mid-interest loans for borrowers with low to medium credit scores range from 9.7 percent to 16.2 percent, roughly two to three times the average for comparable commercial bank loans.

In the first half of this year, savings banks issued over 491,000 such loans, up 14 percent from the second half of last year and the highest level on record, according to the Korea Federation of Savings Banks. At the current pace, the annual tally could reach 1 million for the first time.

The shift comes as banks tighten access to household credit, traditionally the main source of financing for consumers. In July, KB Kookmin Bank halved the maximum mortgage available to individual borrowers nationwide to 300 million won ($212,000) from 600 million won. Other major lenders like Hana Bank have also restricted online lending channels for new borrowers.

The squeeze is reaching even relatively well-qualified borrowers. The number of mid-interest loans extended to people with credit scores of 800 or higher hit a four-year high in the second quarter, the federation said.

In July, the number of inquiries from borrowers with credit scores in the 900s about their borrowing limits from non-bank financial institutions reached 1.51 million, up 28,573 from the previous month, according to Finda, a domestic loan comparison and brokerage platform.

The shift toward more expensive credit could leave financially vulnerable households with even less room to service their debts, increasing the risk of delinquencies and personal bankruptcies. There are also concerns that borrowers shut out of the regulated financial system could turn to illegal private lenders.

There are already signs of mounting stress. The delinquency rate on unsecured loans at medium-sized and large savings banks rose to 6.93 percent in the first quarter, up about 0.5 percentage point from the end of last year, according to the Financial Supervisory Service.