March Announcement of household debt management plan
Prospect of’Applying 40% of DSR by Borrower’
Financial authorities extend the loan-to-deposit ratio, etc.
“Checking the implementation of the contingent on the condition of disposition”
A bank window in Seoul. yunhap news
The demand for credit loans, which seemed to have collapsed last month as the stock market stagnated and loan interest rates rose, is exploding again in March. The stock market is still moving sideways in March, but it is analyzed that the last-minute demand to receive loans ahead of the financial authorities’ announcement of the household debt management plan announced in the middle of this month is rushing.
According to the banknote on the 9th, the credit balance of the five major banks, including KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup, as of the 5th was 136 trillion 2009 billion won. Since the balance at the end of February was 135,1683 billion won, it has increased by 1,326 trillion won in just four business days since March.
In the new year, the five major commercial banks’ credit loans increased sharply. With the stock market booming, with the KOSPI surpassing 3200 in January, the credit loans of the five major banks increased by 1.5909 trillion won in the month of January. However, the heat of the stock market, which was burning in February, has somewhat slowed down, and loan interest rates have risen, and demand for credit loans has also declined. Credit loans of the five major banks declined by 70.7 billion won from the previous month at the end of February.
The atmosphere of’debt investment’ (debt investment) and’spirituality’ (attracting souls), which seemed to decrease as it was, is changing again in March. On the 2nd, which was the first business day in March, the balance of credit loans of the five major banks increased by KRW 6746 billion, turning to an increase, and it exceeded KRW 1 trillion in 4 business days. Considering that the total increase in January was around 1.5 trillion won, it is an explosive increase.
It is analyzed that credit loans surge in March because the financial authorities are ahead of a household debt management plan, which is scheduled to be announced in the middle of this month.
The core content of this household debt management plan is expected to be’a 40% total debt repayment ratio (DSR) for each borrower’. DSR is an index that calculates the burden of repayment of principal and interest for all loans of borrowers during loan review. It reflects the burden of principal and interest not only in mortgage loans, but also for all financial sector loans.
The financial authorities plan to change the DSR regulation, which was the average regulation for each financial institution, to a method of applying DSR 40% per individual borrower. This will reduce the credit limit an individual can receive. The Financial Services Commission decided not to retroactively apply the new system to loans received prior to the enforcement of the regulation. Therefore, it is analyzed that this increase in credit loans is due to the movement to receive loans in advance due to anxiety that loans may be blocked after the regulation.
In November of last year, when the financial authorities announced a 40% DSR regulation on credit loans exceeding 100 million won for high-income earners with an annual income of over 80 million won,’last loan demand’ increased, resulting in an increase of over 1.5 trillion won in credit loans.
Meanwhile, the Financial Services Commission decided to extend the period of deregulation applied to financial companies due to the spread of Corona 19 at a regular meeting that day for an additional six months until September. Accordingly, measures to deregulate the liquidity coverage ratio (LCR), which were scheduled to end at the end of this month, will be extended until September. LCR is the ratio of high-liquidity assets to net cash outflows expected over the next 30 days.
In addition, the grace period for temporary application of banks, savings banks, and mutual finance loan-to-deposit ratios will be extended until December this year. The weight adjustment for loans to private business owners (100%→85%) and the relaxation of the credit limit between subsidiaries within the financial holding company (10% point increase) will be applied until September (3 months additional).
Vice Chairman Do Gyu-sang of the Financial Services Commission said at the 36th meeting of the Financial Risk Response Group, “The expiration of the period of fulfillment of conditional mortgage loans will begin in earnest from the first half of this year.”
In order to block the demand for speculative housing purchases, the government made a contract to dispose of the existing house within a certain period of time and move into a new house in case a homeowner purchases a new house in a regulated area and receives a mortgage loan. In the first half of this year, the number of cases in which the period of implementation of the disposal agreement and the period of implementation of the transfer agreement returns was 9895 cases and 18,188 cases, respectively.
Reporters Nam Jung-hoon and Kim Jun-young [email protected]
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