On the 11th, the Financial Supervisory Service convened an executive in charge of credit for commercial banks and held an emergency household loan inspection meeting. Excess liquidity caused by debt investment is flowing into the stock and real estate markets, which is why it has evolved. At the emergency inspection meeting, the Financial Supervisory Service requested that banks manage the growth rate of credit loans at a level lower than the household loan growth rate management target submitted this time. In particular, he stressed that attention should be paid to the fact that many IPOs are scheduled for January.
17 banks, including commercial banks, internet banks, and local banks, submitted their targets for household loan growth this year compared to the previous year to the Financial Supervisory Service by this day. It is reported that major banks have proposed a household loan growth rate management goal of around 5% this year.
First of all, the financial authorities are planning to join forces focusing on large credit loans. An official from the financial authorities emphasized, “As before, credit loans will not exceed twice the annual salary.”
Bank of Korea governor Joo-yeol Lee also warned seriously about debt. He said at a meeting after the Financial Monetary Committee on the 15th, “I am concerned that investments based on excessive leverage can cause unbearable losses if there is an unexpected shock and price adjustments.”
Governor Lee added, “It is difficult to determine in advance (whether the asset market is bubbling), but the pace of recent stock market growth is very fast compared to the past.”
As a result, commercial banks have begun reducing their credit limit.
From the 18th, Shinhan Bank will reduce the maximum credit loan limit for employees of large and medium-sized companies by 50 million won. Shinhan Bank decided to lower the maximum credit loan limit for employees of designated companies, from 150 million to 200 million won to 100 to 150 million won. This is a credit loan for employees of large and medium-sized companies that have signed an agreement with Shinhan Bank.
At the end of last year, Shinhan Bank lowered the credit limit for professionals such as doctors and lawyers from 250 million to 300 million won to 200 million to 100 million won. It follows the policy of the financial authorities to prevent high-income and high-credit people from investing in real estate in debt.
In the meantime, the financial authorities are speeding up the process of converting from the lending process to the repayment ability test for each borrower.
The goal is to apply 40% of the total debt repayment ratio (DSR) for each individual. Currently, the average value of each financial institution only needs to be managed, so it is possible to exceed 40% of DSR for each individual. In this case, the terms of the loan become more demanding.
DSR is the repayment of principal and interest for all household loans divided by annual income. It reflects the burden of principal and interest not only in mortgage loans, but also all financial sector loans, including credit and card loans.
The financial authorities are planning to come up with a plan to improve household debt in March, which contains details of the repayment ability test for each borrower.
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