Possibility of’payment in installments’ for credit loans exceeding annual income
DSR by bank → individual conversion… As if the loan limit was reduced
Hankyung DB
While the Financial Services Commission announced in March that it would announce a’plan to advance household debt’, attention is being drawn to what level of lending regulations will be included.
According to the Financial Services Commission on the 24th, this plan will be the key to converting the total debt principal and interest repayment ratio (DSR) management method operated by financial companies to borrowers (loan users) in stages.
DSR is the value obtained by dividing the repayment of principal and interest for one year of all household loans by annual income. Now, since each financial company only needs to manage the average, the DSR can exceed 40% for each borrower. However, it means that in the future, each individual will apply ‘40% DSR per person’ at once. In this case, the credit limit for those who have received a mortgage loan will naturally decrease. The Financial Services Commission said, “It is to ensure that household loans can be handled within the repayment capacity of the borrower.”
What attracts the most attention is the’credit loan principal amortization’ that the Financial Services Commission announced in its New Year’s business plan. In the case of a mortgage loan, the principal and interest must be paid off at the same time, but it is common for credit loans to pay only interest and continue to extend the maturity. In the future, the intention is to prevent excessive investment in stocks or real estate by changing credit loans to repay the principal and interest together, and receiving a ‘zero credit loan (a loan that is received at the maximum limit).
The government is considering imposing an amortization obligation on large credit loans that exceed the borrower’s income and repayment capacity. However, fearing the confusion of the loan market, they are drawing a line saying that they will not settle on a uniform amount in the same way as ‘100 million won or more. A government official said, “It is necessary to avoid excessive loans by considering the borrower’s repayment capacity and loan period comprehensively, and to repay them in partial installments when it seems that the repayment capacity is exceeded.”
An official from the financial authorities said, “It is not possible to collectively apply the installment repayment standard to the amount of loans, and income must be considered.” If the amount of credit loans is within the range that can be paid off when compared to income, it does not matter whether they are paid at once or dividedly, but the authorities recognize that if you borrow more than your income, you must apply a brake.
Besides the borrower’s income, the maturity is also a variable. The maturity of a credit loan is usually extended in 1-year increments and can be up to 10 years. It is also being discussed that the amortization is not applied to short-term credit loans of less than one year, but if the maturity is longer through extension, amortized amortization is applied.
The Financial Services Commission is expected to confirm detailed plans by listening to the opinions of the banking sector and announce specific details in March. The Financial Services Commission said, “There are speculations that the amortization of principal for large credit loans will be obligated or the standard for large credit loans is 100 million won, but it is not confirmed at this time.”
Reporter Lim Hyun-woo [email protected]
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