(Photo = Yonhap News)
The announcement of the’Advanced Household Debt Management Plan’, which is the key to applying the total debt principal repayment ratio (DSR) regulation on a per borrower (borrower) basis, has been postponed to next month. This is a measure to prepare additional countermeasures as suspicion of speculation by the Korea Land and Housing Corporation (LH) spreads.
The Financial Services Commission announced on the 23rd that it decided to postpone the household debt management plan, which was scheduled to be announced this month, and announce it next month.
The Financial Services Commission and the Financial Supervisory Service have initially consulted with related organizations with the aim of announcing a “household debt management plan” during this month.
An official from the Financial Services Commission said, “In relation to the recent allegations of LH speculation, an opinion was raised that additional regulatory overhaul on the management of non-housing mortgage loans and non-banking household debts is necessary.” He said, “We decided to make a final announcement of the household debt management plan next month, taking into account the contents of quarterly household loan trends and so on.”
The key to advanced household debt management is to apply the DSR, which is currently managed by financial companies, to each borrower. DSR is an indicator that calculates the principal and interest repayment burden on all loans of the borrower during loan review. It reflects the burden of principal and interest not only in mortgage loans, but also all financial sector loans including credit and card loans. Currently, there were borrowers who took over 40% of DSR loans because they only need to manage 40% of the average for each bank.
However, the financial authorities are discussing ways to ease some restrictions on the youth and homeless people. To this end, final consultations between ministries are underway on ways to allow additional mortgage recognition ratio (LTV) and DSR, etc.
Earlier on the 3rd, Eun Seong-su, chairman of the Financial Services Commission, said, “We will manage loans to be made within the scope of the borrower’s repayment ability, but also consider ways that will help more practically in the formation of the youth housing ladder.”